Correlation Between Gubre Fabrikalari and Tekfen Holding

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

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

Diversification Opportunities for Gubre Fabrikalari and Tekfen Holding

0.53

Correlation Coefficient

Gubre Fabrikalari  Tekfen Holding

Very weak diversification

The 3 months correlation between Gubre and Tekfen is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gubre Fabrikalari TAS and Tekfen Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekfen Holding AS and Gubre Fabrikalari 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 Gubre Fabrikalari TAS are associated (or correlated) with Tekfen Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekfen Holding AS has no effect on the direction of Gubre Fabrikalari i.e., Gubre Fabrikalari and Tekfen Holding go up and down completely randomly.

Pair Corralation between Gubre Fabrikalari and Tekfen Holding

Assuming the 90 days trading horizon Gubre Fabrikalari TAS is expected to generate 0.92 times more return on investment than Tekfen Holding. However, Gubre Fabrikalari TAS is 1.08 times less risky than Tekfen Holding. It trades about 0.67 of its potential returns per unit of risk. Tekfen Holding AS is currently generating about -0.11 per unit of risk. If you would invest  22,250  in Gubre Fabrikalari TAS on September 24, 2024 and sell it today you would earn a total of  5,850  from holding Gubre Fabrikalari TAS or generate 26.29% return on investment over 90 days.

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

Gubre Fabrikalari TAS  vs.  Tekfen Holding AS

Gubre Fabrikalari TAS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gubre Fabrikalari TAS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Gubre Fabrikalari demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Tekfen Holding AS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tekfen Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gubre Fabrikalari and Tekfen Holding

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

The idea behind Gubre Fabrikalari TAS and Tekfen Holding 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.