Correlation Between Trabzon Liman and Smart Gunes

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

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

Diversification Opportunities for Trabzon Liman and Smart Gunes

0.84

Correlation Coefficient

Trabzon Liman  Smart Gunes

Very poor diversification

The 3 months correlation between Trabzon and Smart is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Trabzon Liman Isletmeciligi and Smart Gunes Enerjisi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Gunes Enerjisi and Trabzon Liman 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 Trabzon Liman Isletmeciligi are associated (or correlated) with Smart Gunes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Gunes Enerjisi has no effect on the direction of Trabzon Liman i.e., Trabzon Liman and Smart Gunes go up and down completely randomly.

Pair Corralation between Trabzon Liman and Smart Gunes

Assuming the 90 days trading horizon Trabzon Liman Isletmeciligi is expected to generate 0.67 times more return on investment than Smart Gunes. However, Trabzon Liman Isletmeciligi is 1.5 times less risky than Smart Gunes. It trades about 0.05 of its potential returns per unit of risk. Smart Gunes Enerjisi is currently generating about 0.03 per unit of risk. If you would invest  5,120  in Trabzon Liman Isletmeciligi on October 4, 2024 and sell it today you would earn a total of  4,365  from holding Trabzon Liman Isletmeciligi or generate 85.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.99%
Values	Daily Returns

Trabzon Liman Isletmeciligi  vs.  Smart Gunes Enerjisi

Trabzon Liman Isletm

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trabzon Liman Isletmeciligi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Trabzon Liman may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Smart Gunes Enerjisi

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Trabzon Liman and Smart Gunes

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

The idea behind Trabzon Liman Isletmeciligi and Smart Gunes Enerjisi 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 Transaction History module to view history of all your transactions and understand their impact on performance.