Correlation Between Otokar Otomotiv and Turkish Airlines

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

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

Diversification Opportunities for Otokar Otomotiv and Turkish Airlines

0.48

Correlation Coefficient

Otokar Otomotiv  Turkish Airlines

Very weak diversification

The 3 months correlation between Otokar and Turkish is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Otokar Otomotiv ve and Turkish Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkish Airlines and Otokar Otomotiv 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 Otokar Otomotiv ve 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 Otokar Otomotiv i.e., Otokar Otomotiv and Turkish Airlines go up and down completely randomly.

Pair Corralation between Otokar Otomotiv and Turkish Airlines

Assuming the 90 days trading horizon Otokar Otomotiv is expected to generate 1.24 times less return on investment than Turkish Airlines. But when comparing it to its historical volatility, Otokar Otomotiv ve is 1.11 times less risky than Turkish Airlines. It trades about 0.09 of its potential returns per unit of risk. Turkish Airlines is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  27,950  in Turkish Airlines on September 23, 2024 and sell it today you would earn a total of  1,025  from holding Turkish Airlines or generate 3.67% return on investment over 90 days.

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

Otokar Otomotiv ve  vs.  Turkish Airlines

Otokar Otomotiv ve

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Otokar Otomotiv ve are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Otokar Otomotiv 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 Otokar Otomotiv and Turkish Airlines

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

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.