Correlation Between Migros Ticaret and Turkish Airlines

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

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

Diversification Opportunities for Migros Ticaret and Turkish Airlines

0.88

Correlation Coefficient

Migros Ticaret  Turkish Airlines

Very poor diversification

The 3 months correlation between Migros and Turkish is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Migros Ticaret AS and Turkish Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkish Airlines and Migros Ticaret 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 Migros Ticaret AS 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 Migros Ticaret i.e., Migros Ticaret and Turkish Airlines go up and down completely randomly.

Pair Corralation between Migros Ticaret and Turkish Airlines

Assuming the 90 days trading horizon Migros Ticaret AS is expected to generate 1.33 times more return on investment than Turkish Airlines. However, Migros Ticaret is 1.33 times more volatile than Turkish Airlines. It trades about 0.23 of its potential returns per unit of risk. Turkish Airlines is currently generating about 0.09 per unit of risk. If you would invest  40,342  in Migros Ticaret AS on September 24, 2024 and sell it today you would earn a total of  9,383  from holding Migros Ticaret AS or generate 23.26% return on investment over 90 days.

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

Migros Ticaret AS  vs.  Turkish Airlines

Migros Ticaret AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Migros Ticaret AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Migros Ticaret is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 Migros Ticaret and Turkish Airlines

The main advantage of trading using opposite Migros Ticaret and Turkish Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Migros Ticaret 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 Migros Ticaret AS 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.