Correlation Between Smart Gunes and MEGA METAL

Can any of the company-specific risk be diversified away by investing in both Smart Gunes and MEGA METAL 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 Smart Gunes and MEGA METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smart Gunes Enerjisi and MEGA METAL, you can compare the effects of market volatilities on Smart Gunes and MEGA METAL 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 Smart Gunes with a short position of MEGA METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Gunes and MEGA METAL.

Diversification Opportunities for Smart Gunes and MEGA METAL

0.17

Correlation Coefficient

Smart Gunes  MEGA METAL

Average diversification

The 3 months correlation between Smart and MEGA is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Smart Gunes Enerjisi and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL and Smart Gunes 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 Smart Gunes Enerjisi are associated (or correlated) with MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Smart Gunes i.e., Smart Gunes and MEGA METAL go up and down completely randomly.

Pair Corralation between Smart Gunes and MEGA METAL

Assuming the 90 days trading horizon Smart Gunes Enerjisi is expected to under-perform the MEGA METAL. In addition to that, Smart Gunes is 1.7 times more volatile than MEGA METAL. It trades about -0.05 of its total potential returns per unit of risk. MEGA METAL is currently generating about -0.04 per unit of volatility. If you would invest  3,190  in MEGA METAL on December 21, 2024 and sell it today you would lose (192.00) from holding MEGA METAL or give up 6.02% of portfolio value over 90 days.

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

Smart Gunes Enerjisi  vs.  MEGA METAL

Smart Gunes Enerjisi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smart Gunes Enerjisi 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.

MEGA METAL

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Smart Gunes and MEGA METAL

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

The idea behind Smart Gunes Enerjisi and MEGA METAL 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.