Correlation Between Tekfen Holding and MMC Sanayi

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

Diversification Opportunities for Tekfen Holding and MMC Sanayi

-0.6

Correlation Coefficient

Tekfen Holding  MMC Sanayi

Excellent diversification

The 3 months correlation between Tekfen and MMC is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Tekfen Holding AS and MMC Sanayi ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMC Sanayi ve 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 MMC Sanayi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMC Sanayi ve has no effect on the direction of Tekfen Holding i.e., Tekfen Holding and MMC Sanayi go up and down completely randomly.

Pair Corralation between Tekfen Holding and MMC Sanayi

Assuming the 90 days trading horizon Tekfen Holding is expected to generate 2.04 times less return on investment than MMC Sanayi. But when comparing it to its historical volatility, Tekfen Holding AS is 1.72 times less risky than MMC Sanayi. It trades about 0.07 of its potential returns per unit of risk. MMC Sanayi ve is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,144  in MMC Sanayi ve on October 7, 2024 and sell it today you would earn a total of  1,014  from holding MMC Sanayi ve or generate 88.64% return on investment over 90 days.

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

Tekfen Holding AS  vs.  MMC Sanayi ve

Tekfen Holding AS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Tekfen Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MMC Sanayi ve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MMC Sanayi ve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, MMC Sanayi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tekfen Holding and MMC Sanayi

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

The idea behind Tekfen Holding AS and MMC Sanayi 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.