Correlation Between Turkish Airlines and BINHO

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

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

Diversification Opportunities for Turkish Airlines and BINHO

0.43

Correlation Coefficient

Turkish Airlines  BINHO

Very weak diversification

The 3 months correlation between Turkish and BINHO is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and BINHO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BINHO 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 BINHO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BINHO has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and BINHO go up and down completely randomly.

Pair Corralation between Turkish Airlines and BINHO

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 0.57 times more return on investment than BINHO. However, Turkish Airlines is 1.76 times less risky than BINHO. It trades about 0.1 of its potential returns per unit of risk. BINHO is currently generating about 0.01 per unit of risk. If you would invest  27,050  in Turkish Airlines on October 6, 2024 and sell it today you would earn a total of  2,750  from holding Turkish Airlines or generate 10.17% return on investment over 90 days.

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

Turkish Airlines  vs.  BINHO

Turkish Airlines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turkish Airlines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Turkish Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BINHO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BINHO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, BINHO is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Turkish Airlines and BINHO

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

The idea behind Turkish Airlines and BINHO 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.