Correlation Between Turkish Airlines and Papilon Savunma

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

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

Diversification Opportunities for Turkish Airlines and Papilon Savunma

0.31

Correlation Coefficient

Turkish Airlines  Papilon Savunma

Weak diversification

The 3 months correlation between Turkish and Papilon is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and Papilon Savunma Guvenlik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papilon Savunma Guvenlik 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 Papilon Savunma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papilon Savunma Guvenlik has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and Papilon Savunma go up and down completely randomly.

Pair Corralation between Turkish Airlines and Papilon Savunma

Assuming the 90 days trading horizon Turkish Airlines is expected to under-perform the Papilon Savunma. But the stock apears to be less risky and, when comparing its historical volatility, Turkish Airlines is 1.54 times less risky than Papilon Savunma. The stock trades about -0.02 of its potential returns per unit of risk. The Papilon Savunma Guvenlik is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,334  in Papilon Savunma Guvenlik on October 15, 2024 and sell it today you would earn a total of  23.00  from holding Papilon Savunma Guvenlik or generate 1.72% return on investment over 90 days.

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

Turkish Airlines  vs.  Papilon Savunma Guvenlik

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

Papilon Savunma Guvenlik

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Papilon Savunma Guvenlik are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Papilon Savunma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Turkish Airlines and Papilon Savunma

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

The idea behind Turkish Airlines and Papilon Savunma Guvenlik 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.