Correlation Between Nippon Telegraph and Turk Telekomunikasyon

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

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

Diversification Opportunities for Nippon Telegraph and Turk Telekomunikasyon

-0.12

Correlation Coefficient

Nippon Telegraph  Turk Telekomunikasyon

Good diversification

The 3 months correlation between Nippon and Turk is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph Telephone and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and Nippon Telegraph 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 Nippon Telegraph Telephone 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 Nippon Telegraph i.e., Nippon Telegraph and Turk Telekomunikasyon go up and down completely randomly.

Pair Corralation between Nippon Telegraph and Turk Telekomunikasyon

Assuming the 90 days horizon Nippon Telegraph Telephone is expected to generate 2.89 times more return on investment than Turk Telekomunikasyon. However, Nippon Telegraph is 2.89 times more volatile than Turk Telekomunikasyon AS. It trades about 0.06 of its potential returns per unit of risk. Turk Telekomunikasyon AS is currently generating about -0.12 per unit of risk. If you would invest  93.00  in Nippon Telegraph Telephone on October 24, 2024 and sell it today you would earn a total of  7.00  from holding Nippon Telegraph Telephone or generate 7.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Nippon Telegraph Telephone  vs.  Turk Telekomunikasyon AS

Nippon Telegraph Tel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Telegraph Telephone are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nippon Telegraph may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Turk Telekomunikasyon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turk Telekomunikasyon AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Nippon Telegraph and Turk Telekomunikasyon

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

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