Correlation Between Europower Enerji and Turkish Airlines

Can any of the company-specific risk be diversified away by investing in both Europower Enerji and Turkish Airlines 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 Europower Enerji and Turkish Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Europower Enerji ve and Turkish Airlines, you can compare the effects of market volatilities on Europower Enerji and Turkish Airlines 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 Europower Enerji with a short position of Turkish Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europower Enerji and Turkish Airlines.

Diversification Opportunities for Europower Enerji and Turkish Airlines

0.46

Correlation Coefficient

Europower Enerji  Turkish Airlines

Very weak diversification

The 3 months correlation between Europower and Turkish is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Europower Enerji ve and Turkish Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkish Airlines and Europower Enerji 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 Europower Enerji ve are associated (or correlated) with Turkish Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkish Airlines has no effect on the direction of Europower Enerji i.e., Europower Enerji and Turkish Airlines go up and down completely randomly.

Pair Corralation between Europower Enerji and Turkish Airlines

Assuming the 90 days trading horizon Europower Enerji ve is expected to generate 1.85 times more return on investment than Turkish Airlines. However, Europower Enerji is 1.85 times more volatile than Turkish Airlines. It trades about 0.12 of its potential returns per unit of risk. Turkish Airlines is currently generating about 0.0 per unit of risk. If you would invest  2,928  in Europower Enerji ve on September 19, 2024 and sell it today you would earn a total of  664.00  from holding Europower Enerji ve or generate 22.68% return on investment over 90 days.

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

Europower Enerji ve  vs.  Turkish Airlines

Europower Enerji

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Europower Enerji ve are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Europower Enerji demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Turkish Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turkish Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Turkish Airlines is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Europower Enerji and Turkish Airlines

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

The idea behind Europower Enerji ve and Turkish Airlines 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.