Correlation Between Turkish Airlines and ICBC Turkey

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

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

Diversification Opportunities for Turkish Airlines and ICBC Turkey

-0.29

Correlation Coefficient

Turkish Airlines  ICBC Turkey

Very good diversification

The 3 months correlation between Turkish and ICBC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and ICBC Turkey Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICBC Turkey Bank 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 ICBC Turkey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICBC Turkey Bank has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and ICBC Turkey go up and down completely randomly.

Pair Corralation between Turkish Airlines and ICBC Turkey

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 0.78 times more return on investment than ICBC Turkey. However, Turkish Airlines is 1.28 times less risky than ICBC Turkey. It trades about 0.08 of its potential returns per unit of risk. ICBC Turkey Bank is currently generating about -0.02 per unit of risk. If you would invest  28,225  in Turkish Airlines on December 28, 2024 and sell it today you would earn a total of  2,625  from holding Turkish Airlines or generate 9.3% return on investment over 90 days.

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

Turkish Airlines  vs.  ICBC Turkey Bank

Turkish Airlines

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turkish Airlines are ranked lower than 5 (%) 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 April 2025.

ICBC Turkey Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days ICBC Turkey Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, ICBC Turkey 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 ICBC Turkey

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

The idea behind Turkish Airlines and ICBC Turkey Bank 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.