Correlation Between Mavi Giyim and Tofas Turk

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

By analyzing existing cross correlation between Mavi Giyim Sanayi and Tofas Turk Otomobil, you can compare the effects of market volatilities on Mavi Giyim and Tofas Turk 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 Mavi Giyim with a short position of Tofas Turk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mavi Giyim and Tofas Turk.

Diversification Opportunities for Mavi Giyim and Tofas Turk

0.8

Correlation Coefficient

Mavi Giyim  Tofas Turk

Very poor diversification

The 3 months correlation between Mavi and Tofas is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mavi Giyim Sanayi and Tofas Turk Otomobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tofas Turk Otomobil and Mavi Giyim 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 Mavi Giyim Sanayi are associated (or correlated) with Tofas Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tofas Turk Otomobil has no effect on the direction of Mavi Giyim i.e., Mavi Giyim and Tofas Turk go up and down completely randomly.

Pair Corralation between Mavi Giyim and Tofas Turk

Assuming the 90 days trading horizon Mavi Giyim Sanayi is expected to generate 0.92 times more return on investment than Tofas Turk. However, Mavi Giyim Sanayi is 1.09 times less risky than Tofas Turk. It trades about -0.02 of its potential returns per unit of risk. Tofas Turk Otomobil is currently generating about -0.05 per unit of risk. If you would invest  9,435  in Mavi Giyim Sanayi on September 13, 2024 and sell it today you would lose (360.00) from holding Mavi Giyim Sanayi or give up 3.82% of portfolio value over 90 days.

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

Mavi Giyim Sanayi  vs.  Tofas Turk Otomobil

Mavi Giyim Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mavi Giyim Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mavi Giyim is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Tofas Turk Otomobil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tofas Turk Otomobil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Mavi Giyim and Tofas Turk

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

The idea behind Mavi Giyim Sanayi and Tofas Turk Otomobil 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.