Correlation Between Tekfen Holding and Ipek Dogal

Can any of the company-specific risk be diversified away by investing in both Tekfen Holding and Ipek Dogal 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 Ipek Dogal 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 Ipek Dogal Enerji, you can compare the effects of market volatilities on Tekfen Holding and Ipek Dogal 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 Ipek Dogal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekfen Holding and Ipek Dogal.

Diversification Opportunities for Tekfen Holding and Ipek Dogal

0.3

Correlation Coefficient

Tekfen Holding  Ipek Dogal

Weak diversification

The 3 months correlation between Tekfen and Ipek is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tekfen Holding AS and Ipek Dogal Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipek Dogal Enerji 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 Ipek Dogal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipek Dogal Enerji has no effect on the direction of Tekfen Holding i.e., Tekfen Holding and Ipek Dogal go up and down completely randomly.

Pair Corralation between Tekfen Holding and Ipek Dogal

Assuming the 90 days trading horizon Tekfen Holding is expected to generate 1.32 times less return on investment than Ipek Dogal. But when comparing it to its historical volatility, Tekfen Holding AS is 1.13 times less risky than Ipek Dogal. It trades about 0.09 of its potential returns per unit of risk. Ipek Dogal Enerji is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,804  in Ipek Dogal Enerji on September 13, 2024 and sell it today you would earn a total of  2,081  from holding Ipek Dogal Enerji or generate 54.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.31%
Values	Daily Returns

Tekfen Holding AS  vs.  Ipek Dogal Enerji

Tekfen Holding AS

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tekfen Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ipek Dogal Enerji

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ipek Dogal Enerji are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ipek Dogal demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tekfen Holding and Ipek Dogal

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

The idea behind Tekfen Holding AS and Ipek Dogal Enerji 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.