Correlation Between Orange SA and Turk Telekomunikasyon

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

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

Diversification Opportunities for Orange SA and Turk Telekomunikasyon

0.51

Correlation Coefficient

Orange SA  Turk Telekomunikasyon

Very weak diversification

The 3 months correlation between Orange and Turk is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and Orange SA 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 Orange SA 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 Orange SA i.e., Orange SA and Turk Telekomunikasyon go up and down completely randomly.

Pair Corralation between Orange SA and Turk Telekomunikasyon

Assuming the 90 days horizon Orange SA is expected to generate 0.8 times more return on investment than Turk Telekomunikasyon. However, Orange SA is 1.25 times less risky than Turk Telekomunikasyon. It trades about 0.21 of its potential returns per unit of risk. Turk Telekomunikasyon AS is currently generating about 0.1 per unit of risk. If you would invest  955.00  in Orange SA on December 20, 2024 and sell it today you would earn a total of  275.00  from holding Orange SA or generate 28.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

Orange SA  vs.  Turk Telekomunikasyon AS

Orange SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orange SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Orange SA reported solid returns over the last few months and may actually be approaching a breakup point.

Turk Telekomunikasyon

Risk-Adjusted Performance

OK

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

Pair Trading with Orange SA and Turk Telekomunikasyon

The main advantage of trading using opposite Orange SA and Turk Telekomunikasyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA 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 Orange SA 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.