Correlation Between Telefnica and Turk Telekomunikasyon

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

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

Diversification Opportunities for Telefnica and Turk Telekomunikasyon

0.4

Correlation Coefficient

Telefnica  Turk Telekomunikasyon

Very weak diversification

The 3 months correlation between Telefnica and Turk is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Telefnica SA and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and Telefnica 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 Telefnica SA 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 Telefnica i.e., Telefnica and Turk Telekomunikasyon go up and down completely randomly.

Pair Corralation between Telefnica and Turk Telekomunikasyon

Assuming the 90 days horizon Telefnica SA is expected to under-perform the Turk Telekomunikasyon. In addition to that, Telefnica is 3.62 times more volatile than Turk Telekomunikasyon AS. It trades about -0.06 of its total potential returns per unit of risk. Turk Telekomunikasyon AS is currently generating about -0.12 per unit of volatility. If you would invest  275.00  in Turk Telekomunikasyon AS on October 24, 2024 and sell it today you would lose (21.00) from holding Turk Telekomunikasyon AS or give up 7.64% of portfolio value over 90 days.

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

Telefnica SA  vs.  Turk Telekomunikasyon AS

Telefnica SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefnica SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Telefnica and Turk Telekomunikasyon

The main advantage of trading using opposite Telefnica and Turk Telekomunikasyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefnica 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 Telefnica SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.