Correlation Between SASA Polyester and Eregli Demir

Can any of the company-specific risk be diversified away by investing in both SASA Polyester and Eregli Demir 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 SASA Polyester and Eregli Demir into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SASA Polyester Sanayi and Eregli Demir ve, you can compare the effects of market volatilities on SASA Polyester and Eregli Demir 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 SASA Polyester with a short position of Eregli Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of SASA Polyester and Eregli Demir.

Diversification Opportunities for SASA Polyester and Eregli Demir

0.67

Correlation Coefficient

SASA Polyester  Eregli Demir

Poor diversification

The 3 months correlation between SASA and Eregli is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SASA Polyester Sanayi and Eregli Demir ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eregli Demir ve and SASA Polyester 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 SASA Polyester Sanayi are associated (or correlated) with Eregli Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eregli Demir ve has no effect on the direction of SASA Polyester i.e., SASA Polyester and Eregli Demir go up and down completely randomly.

Pair Corralation between SASA Polyester and Eregli Demir

Assuming the 90 days trading horizon SASA Polyester Sanayi is expected to under-perform the Eregli Demir. In addition to that, SASA Polyester is 1.01 times more volatile than Eregli Demir ve. It trades about -0.04 of its total potential returns per unit of risk. Eregli Demir ve is currently generating about -0.04 per unit of volatility. If you would invest  2,460  in Eregli Demir ve on December 30, 2024 and sell it today you would lose (208.00) from holding Eregli Demir ve or give up 8.46% of portfolio value over 90 days.

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

SASA Polyester Sanayi  vs.  Eregli Demir ve

SASA Polyester Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days SASA Polyester Sanayi 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.

Eregli Demir ve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eregli Demir ve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with SASA Polyester and Eregli Demir

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

The idea behind SASA Polyester Sanayi and Eregli Demir 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.