Correlation Between Politeknik Metal and Penguen Gida

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

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

Diversification Opportunities for Politeknik Metal and Penguen Gida

0.73

Correlation Coefficient

Politeknik Metal  Penguen Gida

Poor diversification

The 3 months correlation between Politeknik and Penguen is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Politeknik Metal Sanayi and Penguen Gida Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penguen Gida Sanayi and Politeknik Metal 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 Politeknik Metal Sanayi are associated (or correlated) with Penguen Gida. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penguen Gida Sanayi has no effect on the direction of Politeknik Metal i.e., Politeknik Metal and Penguen Gida go up and down completely randomly.

Pair Corralation between Politeknik Metal and Penguen Gida

Assuming the 90 days trading horizon Politeknik Metal Sanayi is expected to generate 1.51 times more return on investment than Penguen Gida. However, Politeknik Metal is 1.51 times more volatile than Penguen Gida Sanayi. It trades about 0.03 of its potential returns per unit of risk. Penguen Gida Sanayi is currently generating about 0.04 per unit of risk. If you would invest  684,750  in Politeknik Metal Sanayi on September 24, 2024 and sell it today you would earn a total of  24,750  from holding Politeknik Metal Sanayi or generate 3.61% return on investment over 90 days.

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

Politeknik Metal Sanayi  vs.  Penguen Gida Sanayi

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Penguen Gida Sanayi

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Politeknik Metal and Penguen Gida

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

The idea behind Politeknik Metal Sanayi and Penguen Gida 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.