Correlation Between SASA Polyester and Mercan Kimya

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

Diversification Opportunities for SASA Polyester and Mercan Kimya

-0.69

Correlation Coefficient

SASA Polyester  Mercan Kimya

Excellent diversification

The 3 months correlation between SASA and Mercan is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding SASA Polyester Sanayi and Mercan Kimya Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercan Kimya Sanayi 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 Mercan Kimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercan Kimya Sanayi has no effect on the direction of SASA Polyester i.e., SASA Polyester and Mercan Kimya go up and down completely randomly.

Pair Corralation between SASA Polyester and Mercan Kimya

Assuming the 90 days trading horizon SASA Polyester Sanayi is expected to under-perform the Mercan Kimya. In addition to that, SASA Polyester is 1.0 times more volatile than Mercan Kimya Sanayi. It trades about -0.04 of its total potential returns per unit of risk. Mercan Kimya Sanayi is currently generating about 0.02 per unit of volatility. If you would invest  1,150  in Mercan Kimya Sanayi on September 23, 2024 and sell it today you would earn a total of  60.00  from holding Mercan Kimya Sanayi or generate 5.22% return on investment over 90 days.

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

SASA Polyester Sanayi  vs.  Mercan Kimya Sanayi

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 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.

Mercan Kimya Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercan Kimya Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Mercan Kimya is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SASA Polyester and Mercan Kimya

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

The idea behind SASA Polyester Sanayi and Mercan Kimya Sanayi 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.