Correlation Between Koza Polyester and Politeknik Metal

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

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

Diversification Opportunities for Koza Polyester and Politeknik Metal

0.66

Correlation Coefficient

Koza Polyester  Politeknik Metal

Poor diversification

The 3 months correlation between Koza and Politeknik is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Koza Polyester Sanayi and Politeknik Metal Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Politeknik Metal Sanayi and Koza 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 Koza Polyester Sanayi are associated (or correlated) with Politeknik Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Politeknik Metal Sanayi has no effect on the direction of Koza Polyester i.e., Koza Polyester and Politeknik Metal go up and down completely randomly.

Pair Corralation between Koza Polyester and Politeknik Metal

Assuming the 90 days trading horizon Koza Polyester is expected to generate 1.54 times less return on investment than Politeknik Metal. In addition to that, Koza Polyester is 1.05 times more volatile than Politeknik Metal Sanayi. It trades about 0.02 of its total potential returns per unit of risk. Politeknik Metal Sanayi is currently generating about 0.03 per unit of volatility. If you would invest  694,500  in Politeknik Metal Sanayi on September 22, 2024 and sell it today you would earn a total of  15,000  from holding Politeknik Metal Sanayi or generate 2.16% return on investment over 90 days.

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

Koza Polyester Sanayi  vs.  Politeknik Metal Sanayi

Koza Polyester Sanayi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Koza Polyester Sanayi are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Koza Polyester is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Politeknik Metal Sanayi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Politeknik Metal Sanayi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Politeknik Metal is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Koza Polyester and Politeknik Metal

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

The idea behind Koza Polyester Sanayi and Politeknik Metal 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.