Correlation Between Akbank TAS and Tofas Turk

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

By analyzing existing cross correlation between Akbank TAS and Tofas Turk Otomobil, you can compare the effects of market volatilities on Akbank TAS and Tofas Turk 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 Akbank TAS with a short position of Tofas Turk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akbank TAS and Tofas Turk.

Diversification Opportunities for Akbank TAS and Tofas Turk

0.62

Correlation Coefficient

Akbank TAS  Tofas Turk

Poor diversification

The 3 months correlation between Akbank and Tofas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Akbank TAS and Tofas Turk Otomobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tofas Turk Otomobil and Akbank TAS 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 Akbank TAS are associated (or correlated) with Tofas Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tofas Turk Otomobil has no effect on the direction of Akbank TAS i.e., Akbank TAS and Tofas Turk go up and down completely randomly.

Pair Corralation between Akbank TAS and Tofas Turk

Assuming the 90 days trading horizon Akbank TAS is expected to generate 1.64 times less return on investment than Tofas Turk. But when comparing it to its historical volatility, Akbank TAS is 1.06 times less risky than Tofas Turk. It trades about 0.1 of its potential returns per unit of risk. Tofas Turk Otomobil is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  19,720  in Tofas Turk Otomobil on October 4, 2024 and sell it today you would earn a total of  1,500  from holding Tofas Turk Otomobil or generate 7.61% return on investment over 90 days.

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

Akbank TAS  vs.  Tofas Turk Otomobil

Akbank TAS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Akbank TAS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Akbank TAS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tofas Turk Otomobil

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tofas Turk Otomobil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tofas Turk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Akbank TAS and Tofas Turk

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

The idea behind Akbank TAS and Tofas Turk Otomobil 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..