Correlation Between Eregli Demir and Sonmez Pamuklu
Can any of the company-specific risk be diversified away by investing in both Eregli Demir and Sonmez Pamuklu 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 Eregli Demir and Sonmez Pamuklu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eregli Demir ve and Sonmez Pamuklu Sanayii, you can compare the effects of market volatilities on Eregli Demir and Sonmez Pamuklu 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 Eregli Demir with a short position of Sonmez Pamuklu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eregli Demir and Sonmez Pamuklu.
Diversification Opportunities for Eregli Demir and Sonmez Pamuklu
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eregli and Sonmez is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Sonmez Pamuklu Sanayii in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonmez Pamuklu Sanayii and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Sonmez Pamuklu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonmez Pamuklu Sanayii has no effect on the direction of Eregli Demir i.e., Eregli Demir and Sonmez Pamuklu go up and down completely randomly.
Pair Corralation between Eregli Demir and Sonmez Pamuklu
Assuming the 90 days trading horizon Eregli Demir ve is expected to generate 0.74 times more return on investment than Sonmez Pamuklu. However, Eregli Demir ve is 1.35 times less risky than Sonmez Pamuklu. It trades about 0.03 of its potential returns per unit of risk. Sonmez Pamuklu Sanayii is currently generating about -0.09 per unit of risk. If you would invest 2,480 in Eregli Demir ve on August 31, 2024 and sell it today you would earn a total of 98.00 from holding Eregli Demir ve or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eregli Demir ve vs. Sonmez Pamuklu Sanayii
Performance |
| Timeline |
| Eregli Demir ve |
| Sonmez Pamuklu Sanayii |
Eregli Demir and Sonmez Pamuklu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eregli Demir and Sonmez Pamuklu
The main advantage of trading using opposite Eregli Demir and Sonmez Pamuklu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eregli Demir position performs unexpectedly, Sonmez Pamuklu 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 Sonmez Pamuklu will offset losses from the drop in Sonmez Pamuklu's long position.| Eregli Demir vs. Turkiye Sise ve | Eregli Demir vs. Turkiye Petrol Rafinerileri | Eregli Demir vs. Ford Otomotiv Sanayi | Eregli Demir vs. Petkim Petrokimya Holding |
| Sonmez Pamuklu vs. Ford Otomotiv Sanayi | Sonmez Pamuklu vs. Eregli Demir ve | Sonmez Pamuklu vs. Turkiye Petrol Rafinerileri | Sonmez Pamuklu vs. Turkiye Sise ve |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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