Correlation Between Tekfen Holding and Dogus Otomotiv

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

By analyzing existing cross correlation between Tekfen Holding AS and Dogus Otomotiv Servis, you can compare the effects of market volatilities on Tekfen Holding and Dogus 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 Tekfen Holding with a short position of Dogus Otomotiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekfen Holding and Dogus Otomotiv.

Diversification Opportunities for Tekfen Holding and Dogus Otomotiv

0.29

Correlation Coefficient

Tekfen Holding  Dogus Otomotiv

Modest diversification

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

Pair Corralation between Tekfen Holding and Dogus Otomotiv

Assuming the 90 days trading horizon Tekfen Holding AS is expected to generate 1.69 times more return on investment than Dogus Otomotiv. However, Tekfen Holding is 1.69 times more volatile than Dogus Otomotiv Servis. It trades about 0.05 of its potential returns per unit of risk. Dogus Otomotiv Servis is currently generating about -0.11 per unit of risk. If you would invest  5,650  in Tekfen Holding AS on October 13, 2024 and sell it today you would earn a total of  870.00  from holding Tekfen Holding AS or generate 15.4% return on investment over 90 days.

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

Tekfen Holding AS  vs.  Dogus Otomotiv Servis

Tekfen Holding AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Tekfen Holding is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Dogus Otomotiv Servis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dogus Otomotiv Servis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dogus Otomotiv is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tekfen Holding and Dogus Otomotiv

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

The idea behind Tekfen Holding AS and Dogus Otomotiv Servis 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.