Correlation Between Tekfen Holding and Kardemir Karabuk

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

Diversification Opportunities for Tekfen Holding and Kardemir Karabuk

0.48

Correlation Coefficient

Tekfen Holding  Kardemir Karabuk

Very weak diversification

The 3 months correlation between Tekfen and Kardemir is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Tekfen Holding AS and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir 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 Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of Tekfen Holding i.e., Tekfen Holding and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between Tekfen Holding and Kardemir Karabuk

Assuming the 90 days trading horizon Tekfen Holding AS is expected to generate 1.32 times more return on investment than Kardemir Karabuk. However, Tekfen Holding is 1.32 times more volatile than Kardemir Karabuk Demir. It trades about 0.18 of its potential returns per unit of risk. Kardemir Karabuk Demir is currently generating about 0.16 per unit of risk. If you would invest  5,470  in Tekfen Holding AS on September 14, 2024 and sell it today you would earn a total of  2,095  from holding Tekfen Holding AS or generate 38.3% return on investment over 90 days.

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

Tekfen Holding AS  vs.  Kardemir Karabuk Demir

Tekfen Holding AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 14 (%) 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.

Kardemir Karabuk Demir

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tekfen Holding and Kardemir Karabuk

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

The idea behind Tekfen Holding AS and Kardemir Karabuk Demir 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.