Correlation Between Politeknik Metal and IZDEMIR Enerji

Can any of the company-specific risk be diversified away by investing in both Politeknik Metal and IZDEMIR Enerji at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Politeknik Metal and IZDEMIR Enerji into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Politeknik Metal Sanayi and IZDEMIR Enerji Elektrik, you can compare the effects of market volatilities on Politeknik Metal and IZDEMIR Enerji and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Politeknik Metal with a short position of IZDEMIR Enerji. Check out your portfolio center. Please also check ongoing floating volatility patterns of Politeknik Metal and IZDEMIR Enerji.

Diversification Opportunities for Politeknik Metal and IZDEMIR Enerji

0.38

Correlation Coefficient

Politeknik Metal  IZDEMIR Enerji

Weak diversification

The 3 months correlation between Politeknik and IZDEMIR is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and IZDEMIR Enerji Elektrik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IZDEMIR Enerji Elektrik and Politeknik Metal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Politeknik Metal Sanayi are associated (or correlated) with IZDEMIR Enerji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IZDEMIR Enerji Elektrik has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and IZDEMIR Enerji go up and down completely randomly.

Pair Corralation between Politeknik Metal and IZDEMIR Enerji

Assuming the 90 days trading horizon Politeknik Metal is expected to generate 1.99 times less return on investment than IZDEMIR Enerji. In addition to that, Politeknik Metal is 1.06 times more volatile than IZDEMIR Enerji Elektrik. It trades about 0.06 of its total potential returns per unit of risk. IZDEMIR Enerji Elektrik is currently generating about 0.12 per unit of volatility. If you would invest  413.00  in IZDEMIR Enerji Elektrik on October 7, 2024 and sell it today you would earn a total of  80.00  from holding IZDEMIR Enerji Elektrik or generate 19.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Politeknik Metal Sanayi  vs.  IZDEMIR Enerji Elektrik

Politeknik Metal Sanayi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Politeknik Metal Sanayi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Politeknik Metal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

IZDEMIR Enerji Elektrik

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IZDEMIR Enerji Elektrik are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, IZDEMIR Enerji demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Politeknik Metal and IZDEMIR Enerji

The main advantage of trading using opposite Politeknik Metal and IZDEMIR Enerji positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Politeknik Metal position performs unexpectedly, IZDEMIR Enerji can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IZDEMIR Enerji will offset losses from the drop in IZDEMIR Enerji's long position.

The idea behind Politeknik Metal Sanayi and IZDEMIR Enerji Elektrik pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.