Correlation Between Turkish Airlines and Netas Telekomunikasyon

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Can any of the company-specific risk be diversified away by investing in both Turkish Airlines and Netas 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 Turkish Airlines and Netas Telekomunikasyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Turkish Airlines and Netas Telekomunikasyon AS, you can compare the effects of market volatilities on Turkish Airlines and Netas 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 Turkish Airlines with a short position of Netas Telekomunikasyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkish Airlines and Netas Telekomunikasyon.

Diversification Opportunities for Turkish Airlines and Netas Telekomunikasyon

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Turkish and Netas is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and Netas Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netas Telekomunikasyon 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 Netas Telekomunikasyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netas Telekomunikasyon has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and Netas Telekomunikasyon go up and down completely randomly.

Pair Corralation between Turkish Airlines and Netas Telekomunikasyon

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 1.52 times less return on investment than Netas Telekomunikasyon. But when comparing it to its historical volatility, Turkish Airlines is 1.66 times less risky than Netas Telekomunikasyon. It trades about 0.08 of its potential returns per unit of risk. Netas Telekomunikasyon AS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,740  in Netas Telekomunikasyon AS on October 10, 2024 and sell it today you would earn a total of  4,260  from holding Netas Telekomunikasyon AS or generate 155.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Turkish Airlines  vs.  Netas Telekomunikasyon AS

 Performance 
       Timeline  
Turkish Airlines 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
Modest
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 inconsistent forward indicators, Turkish Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Netas Telekomunikasyon 

Risk-Adjusted Performance

0 of 100

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

Turkish Airlines and Netas Telekomunikasyon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Turkish Airlines and Netas Telekomunikasyon

The main advantage of trading using opposite Turkish Airlines and Netas Telekomunikasyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turkish Airlines position performs unexpectedly, Netas 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 Netas Telekomunikasyon will offset losses from the drop in Netas Telekomunikasyon's long position.
The idea behind Turkish Airlines and Netas 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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