Correlation Between Smart Gunes and MEGA METAL
Can any of the company-specific risk be diversified away by investing in both Smart Gunes and MEGA 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 Smart Gunes and MEGA METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smart Gunes Enerjisi and MEGA METAL, you can compare the effects of market volatilities on Smart Gunes and MEGA 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 Smart Gunes with a short position of MEGA METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Gunes and MEGA METAL.
Diversification Opportunities for Smart Gunes and MEGA METAL
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smart and MEGA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Smart Gunes Enerjisi and MEGA METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEGA METAL and Smart Gunes 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 Smart Gunes Enerjisi are associated (or correlated) with MEGA METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEGA METAL has no effect on the direction of Smart Gunes i.e., Smart Gunes and MEGA METAL go up and down completely randomly.
Pair Corralation between Smart Gunes and MEGA METAL
Assuming the 90 days trading horizon Smart Gunes is expected to generate 1.73 times less return on investment than MEGA METAL. But when comparing it to its historical volatility, Smart Gunes Enerjisi is 1.33 times less risky than MEGA METAL. It trades about 0.02 of its potential returns per unit of risk. MEGA METAL is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,112 in MEGA METAL on September 2, 2024 and sell it today you would lose (8.00) from holding MEGA METAL or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 64.86% |
| Values | Daily Returns |
Smart Gunes Enerjisi vs. MEGA METAL
Performance |
| Timeline |
| Smart Gunes Enerjisi |
| MEGA METAL |
Smart Gunes and MEGA METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smart Gunes and MEGA METAL
The main advantage of trading using opposite Smart Gunes and MEGA METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smart Gunes position performs unexpectedly, MEGA 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 MEGA METAL will offset losses from the drop in MEGA METAL's long position.| Smart Gunes vs. MEGA METAL | Smart Gunes vs. Koza Anadolu Metal | Smart Gunes vs. Bms Birlesik Metal | Smart Gunes vs. Sodas Sodyum Sanayi |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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