Correlation Between Akbank Turk and City Developments

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

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

Diversification Opportunities for Akbank Turk and City Developments

-0.64

Correlation Coefficient

Akbank Turk  City Developments

Excellent diversification

The 3 months correlation between Akbank and City is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Akbank Turk Anonim and City Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Developments and Akbank Turk 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 Turk Anonim are associated (or correlated) with City Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Developments has no effect on the direction of Akbank Turk i.e., Akbank Turk and City Developments go up and down completely randomly.

Pair Corralation between Akbank Turk and City Developments

Assuming the 90 days horizon Akbank Turk Anonim is expected to generate 1.76 times more return on investment than City Developments. However, Akbank Turk is 1.76 times more volatile than City Developments. It trades about 0.02 of its potential returns per unit of risk. City Developments is currently generating about -0.07 per unit of risk. If you would invest  365.00  in Akbank Turk Anonim on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Akbank Turk Anonim or generate 0.0% return on investment over 90 days.

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

Akbank Turk Anonim  vs.  City Developments

Akbank Turk Anonim

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akbank Turk Anonim are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Akbank Turk showed solid returns over the last few months and may actually be approaching a breakup point.

City Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City Developments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, City Developments is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Akbank Turk and City Developments

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

The idea behind Akbank Turk Anonim and City Developments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.