Correlation Between Turkish Airlines and Alfas Solar

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

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

Diversification Opportunities for Turkish Airlines and Alfas Solar

0.58

Correlation Coefficient

Turkish Airlines  Alfas Solar

Very weak diversification

The 3 months correlation between Turkish and Alfas is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and Alfas Solar Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfas Solar Enerji and Turkish Airlines 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 Turkish Airlines are associated (or correlated) with Alfas Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfas Solar Enerji has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and Alfas Solar go up and down completely randomly.

Pair Corralation between Turkish Airlines and Alfas Solar

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 0.61 times more return on investment than Alfas Solar. However, Turkish Airlines is 1.65 times less risky than Alfas Solar. It trades about 0.03 of its potential returns per unit of risk. Alfas Solar Enerji is currently generating about -0.01 per unit of risk. If you would invest  27,400  in Turkish Airlines on October 24, 2024 and sell it today you would earn a total of  3,125  from holding Turkish Airlines or generate 11.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

Turkish Airlines  vs.  Alfas Solar Enerji

Turkish Airlines

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turkish Airlines are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turkish Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alfas Solar Enerji

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alfas Solar Enerji are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Alfas Solar demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turkish Airlines and Alfas Solar

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

The idea behind Turkish Airlines and Alfas Solar Enerji 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.