Correlation Between Tekfen Holding and Tofas Turk

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

Diversification Opportunities for Tekfen Holding and Tofas Turk

-0.59

Correlation Coefficient

Tekfen Holding  Tofas Turk

Excellent diversification

The 3 months correlation between Tekfen and Tofas is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tekfen Holding AS and Tofas Turk Otomobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tofas Turk Otomobil 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 Tofas Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tofas Turk Otomobil has no effect on the direction of Tekfen Holding i.e., Tekfen Holding and Tofas Turk go up and down completely randomly.

Pair Corralation between Tekfen Holding and Tofas Turk

Assuming the 90 days trading horizon Tekfen Holding AS is expected to under-perform the Tofas Turk. In addition to that, Tekfen Holding is 1.09 times more volatile than Tofas Turk Otomobil. It trades about -0.08 of its total potential returns per unit of risk. Tofas Turk Otomobil is currently generating about 0.0 per unit of volatility. If you would invest  19,720  in Tofas Turk Otomobil on December 3, 2024 and sell it today you would lose (220.00) from holding Tofas Turk Otomobil or give up 1.12% of portfolio value over 90 days.

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

Tekfen Holding AS  vs.  Tofas Turk Otomobil

Tekfen Holding AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tekfen Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Tofas Turk Otomobil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tofas Turk Otomobil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Tofas Turk 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 Tofas Turk

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

The idea behind Tekfen Holding AS and Tofas Turk Otomobil 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.