Correlation Between Deutsche Telekom and Turk Telekomunikasyon

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

By analyzing existing cross correlation between Deutsche Telekom AG and Turk Telekomunikasyon AS, you can compare the effects of market volatilities on Deutsche Telekom and Turk Telekomunikasyon 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 Deutsche Telekom with a short position of Turk Telekomunikasyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Turk Telekomunikasyon.

Diversification Opportunities for Deutsche Telekom and Turk Telekomunikasyon

0.37

Correlation Coefficient

Deutsche Telekom  Turk Telekomunikasyon

Weak diversification

The 3 months correlation between Deutsche and Turk is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and Deutsche Telekom 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 Deutsche Telekom AG are associated (or correlated) with Turk Telekomunikasyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turk Telekomunikasyon has no effect on the direction of Deutsche Telekom i.e., Deutsche Telekom and Turk Telekomunikasyon go up and down completely randomly.

Pair Corralation between Deutsche Telekom and Turk Telekomunikasyon

Assuming the 90 days horizon Deutsche Telekom AG is expected to generate 1.87 times more return on investment than Turk Telekomunikasyon. However, Deutsche Telekom is 1.87 times more volatile than Turk Telekomunikasyon AS. It trades about 0.04 of its potential returns per unit of risk. Turk Telekomunikasyon AS is currently generating about -0.12 per unit of risk. If you would invest  3,000  in Deutsche Telekom AG on October 25, 2024 and sell it today you would earn a total of  116.00  from holding Deutsche Telekom AG or generate 3.87% return on investment over 90 days.

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

Deutsche Telekom AG  vs.  Turk Telekomunikasyon AS

Deutsche Telekom

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Telekom AG are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Deutsche Telekom is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Turk Telekomunikasyon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turk Telekomunikasyon AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Deutsche Telekom and Turk Telekomunikasyon

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

The idea behind Deutsche Telekom AG and Turk Telekomunikasyon AS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.