Correlation Between SASA Polyester and Kardemir Karabuk

Can any of the company-specific risk be diversified away by investing in both SASA Polyester and Kardemir Karabuk 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 Kardemir Karabuk 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 Kardemir Karabuk Demir, you can compare the effects of market volatilities on SASA Polyester and Kardemir Karabuk 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 Kardemir Karabuk. Check out your portfolio center. Please also check ongoing floating volatility patterns of SASA Polyester and Kardemir Karabuk.

Diversification Opportunities for SASA Polyester and Kardemir Karabuk

0.51

Correlation Coefficient

SASA Polyester  Kardemir Karabuk

Very weak diversification

The 3 months correlation between SASA and Kardemir is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SASA Polyester Sanayi and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir 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 Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of SASA Polyester i.e., SASA Polyester and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between SASA Polyester and Kardemir Karabuk

Assuming the 90 days trading horizon SASA Polyester Sanayi is expected to generate 14.07 times more return on investment than Kardemir Karabuk. However, SASA Polyester is 14.07 times more volatile than Kardemir Karabuk Demir. It trades about 0.04 of its potential returns per unit of risk. Kardemir Karabuk Demir is currently generating about 0.05 per unit of risk. If you would invest  496.00  in SASA Polyester Sanayi on September 26, 2024 and sell it today you would lose (92.00) from holding SASA Polyester Sanayi or give up 18.55% of portfolio value over 90 days.

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

SASA Polyester Sanayi  vs.  Kardemir Karabuk Demir

SASA Polyester Sanayi

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, SASA Polyester is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Kardemir Karabuk Demir

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SASA Polyester and Kardemir Karabuk

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

The idea behind SASA Polyester Sanayi and Kardemir Karabuk Demir 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..