Correlation Between Alarko Holding and Turkiye Garanti

Can any of the company-specific risk be diversified away by investing in both Alarko Holding and Turkiye Garanti 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 Alarko Holding and Turkiye Garanti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alarko Holding AS and Turkiye Garanti Bankasi, you can compare the effects of market volatilities on Alarko Holding and Turkiye Garanti 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 Alarko Holding with a short position of Turkiye Garanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarko Holding and Turkiye Garanti.

Diversification Opportunities for Alarko Holding and Turkiye Garanti

0.65

Correlation Coefficient

Alarko Holding  Turkiye Garanti

Poor diversification

The 3 months correlation between Alarko and Turkiye is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Alarko Holding AS and Turkiye Garanti Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Garanti Bankasi and Alarko Holding 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 Alarko Holding AS are associated (or correlated) with Turkiye Garanti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Garanti Bankasi has no effect on the direction of Alarko Holding i.e., Alarko Holding and Turkiye Garanti go up and down completely randomly.

Pair Corralation between Alarko Holding and Turkiye Garanti

Assuming the 90 days trading horizon Alarko Holding AS is expected to under-perform the Turkiye Garanti. But the stock apears to be less risky and, when comparing its historical volatility, Alarko Holding AS is 1.16 times less risky than Turkiye Garanti. The stock trades about -0.13 of its potential returns per unit of risk. The Turkiye Garanti Bankasi is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  13,200  in Turkiye Garanti Bankasi on October 9, 2024 and sell it today you would lose (250.00) from holding Turkiye Garanti Bankasi or give up 1.89% of portfolio value over 90 days.

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

Alarko Holding AS  vs.  Turkiye Garanti Bankasi

Alarko Holding AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alarko Holding AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Alarko Holding may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Turkiye Garanti Bankasi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Garanti Bankasi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turkiye Garanti may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Alarko Holding and Turkiye Garanti

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

The idea behind Alarko Holding AS and Turkiye Garanti Bankasi 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.