Correlation Between Turkish Airlines and Otokar Otomotiv

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

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

Diversification Opportunities for Turkish Airlines and Otokar Otomotiv

-0.83

Correlation Coefficient

Turkish Airlines  Otokar Otomotiv

Pay attention - limited upside

The 3 months correlation between Turkish and Otokar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and Otokar Otomotiv ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otokar Otomotiv ve 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 Otokar Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otokar Otomotiv ve has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and Otokar Otomotiv go up and down completely randomly.

Pair Corralation between Turkish Airlines and Otokar Otomotiv

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 1.03 times more return on investment than Otokar Otomotiv. However, Turkish Airlines is 1.03 times more volatile than Otokar Otomotiv ve. It trades about 0.1 of its potential returns per unit of risk. Otokar Otomotiv ve is currently generating about -0.2 per unit of risk. If you would invest  28,900  in Turkish Airlines on December 4, 2024 and sell it today you would earn a total of  2,550  from holding Turkish Airlines or generate 8.82% return on investment over 90 days.

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

Turkish Airlines  vs.  Otokar Otomotiv ve

Turkish Airlines

Risk-Adjusted Performance

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 inconsistent forward indicators, Turkish Airlines may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Otokar Otomotiv ve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Otokar Otomotiv ve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Turkish Airlines and Otokar Otomotiv

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

The idea behind Turkish Airlines and Otokar Otomotiv ve 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.