Correlation Between Stellar and Soktas Tekstil

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

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

Diversification Opportunities for Stellar and Soktas Tekstil

0.02

Correlation Coefficient

Stellar  Soktas Tekstil

Significant diversification

The 3 months correlation between Stellar and Soktas is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Soktas Tekstil Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soktas Tekstil Sanayi and Stellar 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 Stellar are associated (or correlated) with Soktas Tekstil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soktas Tekstil Sanayi has no effect on the direction of Stellar i.e., Stellar and Soktas Tekstil go up and down completely randomly.

Pair Corralation between Stellar and Soktas Tekstil

Assuming the 90 days trading horizon Stellar is expected to generate 2.4 times more return on investment than Soktas Tekstil. However, Stellar is 2.4 times more volatile than Soktas Tekstil Sanayi. It trades about 0.01 of its potential returns per unit of risk. Soktas Tekstil Sanayi is currently generating about -0.05 per unit of risk. If you would invest  44.00  in Stellar on October 11, 2024 and sell it today you would lose (2.00) from holding Stellar or give up 4.55% of portfolio value over 90 days.

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

Stellar  vs.  Soktas Tekstil Sanayi

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Soktas Tekstil Sanayi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Soktas Tekstil Sanayi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Soktas Tekstil demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stellar and Soktas Tekstil

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

The idea behind Stellar and Soktas Tekstil 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.