Correlation Between Politeknik Metal and Tumosan

Can any of the company-specific risk be diversified away by investing in both Politeknik Metal and Tumosan 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 Tumosan 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 Tumosan Motor ve, you can compare the effects of market volatilities on Politeknik Metal and Tumosan 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 Tumosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Politeknik Metal and Tumosan.

Diversification Opportunities for Politeknik Metal and Tumosan

0.53

Correlation Coefficient

Politeknik Metal  Tumosan

Very weak diversification

The 3 months correlation between Politeknik and Tumosan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Tumosan Motor ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tumosan Motor ve 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 Tumosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tumosan Motor ve has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Tumosan go up and down completely randomly.

Pair Corralation between Politeknik Metal and Tumosan

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to under-perform the Tumosan. In addition to that, Politeknik Metal is 1.32 times more volatile than Tumosan Motor ve. It trades about -0.07 of its total potential returns per unit of risk. Tumosan Motor ve is currently generating about -0.07 per unit of volatility. If you would invest  11,290  in Tumosan Motor ve on December 4, 2024 and sell it today you would lose (1,170) from holding Tumosan Motor ve or give up 10.36% of portfolio value over 90 days.

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

Politeknik Metal Sanayi  vs.  Tumosan Motor ve

Politeknik Metal Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Politeknik Metal Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Tumosan Motor ve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tumosan Motor ve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Politeknik Metal and Tumosan

The main advantage of trading using opposite Politeknik Metal and Tumosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Politeknik Metal position performs unexpectedly, Tumosan 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 Tumosan will offset losses from the drop in Tumosan's long position.

The idea behind Politeknik Metal Sanayi and Tumosan Motor ve 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.