Correlation Between Koc Holding and Turkiye Garanti

Can any of the company-specific risk be diversified away by investing in both Koc 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 Koc 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 Koc Holding AS and Turkiye Garanti Bankasi, you can compare the effects of market volatilities on Koc 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 Koc Holding with a short position of Turkiye Garanti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koc Holding and Turkiye Garanti.

Diversification Opportunities for Koc Holding and Turkiye Garanti

0.84

Correlation Coefficient

Koc Holding  Turkiye Garanti

Very poor diversification

The 3 months correlation between Koc and Turkiye is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Koc 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 Koc 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 Koc 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 Koc Holding i.e., Koc Holding and Turkiye Garanti go up and down completely randomly.

Pair Corralation between Koc Holding and Turkiye Garanti

Assuming the 90 days trading horizon Koc Holding is expected to generate 1.36 times less return on investment than Turkiye Garanti. But when comparing it to its historical volatility, Koc Holding AS is 1.09 times less risky than Turkiye Garanti. It trades about 0.1 of its potential returns per unit of risk. Turkiye Garanti Bankasi is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  10,970  in Turkiye Garanti Bankasi on September 12, 2024 and sell it today you would earn a total of  1,920  from holding Turkiye Garanti Bankasi or generate 17.5% return on investment over 90 days.

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

Koc Holding AS  vs.  Turkiye Garanti Bankasi

Koc Holding AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Koc Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Turkiye Garanti Bankasi

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Koc Holding and Turkiye Garanti

The main advantage of trading using opposite Koc Holding and Turkiye Garanti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koc 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 Koc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.