Correlation Between Trabzon Liman and Migros Ticaret

Can any of the company-specific risk be diversified away by investing in both Trabzon Liman and Migros Ticaret 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 Trabzon Liman and Migros Ticaret into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trabzon Liman Isletmeciligi and Migros Ticaret AS, you can compare the effects of market volatilities on Trabzon Liman and Migros Ticaret 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 Trabzon Liman with a short position of Migros Ticaret. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trabzon Liman and Migros Ticaret.

Diversification Opportunities for Trabzon Liman and Migros Ticaret

0.83

Correlation Coefficient

Trabzon Liman  Migros Ticaret

Very poor diversification

The 3 months correlation between Trabzon and Migros is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Trabzon Liman Isletmeciligi and Migros Ticaret AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Migros Ticaret AS and Trabzon Liman 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 Trabzon Liman Isletmeciligi are associated (or correlated) with Migros Ticaret. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Migros Ticaret AS has no effect on the direction of Trabzon Liman i.e., Trabzon Liman and Migros Ticaret go up and down completely randomly.

Pair Corralation between Trabzon Liman and Migros Ticaret

Assuming the 90 days trading horizon Trabzon Liman Isletmeciligi is expected to under-perform the Migros Ticaret. In addition to that, Trabzon Liman is 1.01 times more volatile than Migros Ticaret AS. It trades about -0.16 of its total potential returns per unit of risk. Migros Ticaret AS is currently generating about 0.1 per unit of volatility. If you would invest  51,350  in Migros Ticaret AS on October 10, 2024 and sell it today you would earn a total of  1,700  from holding Migros Ticaret AS or generate 3.31% return on investment over 90 days.

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

Trabzon Liman Isletmeciligi  vs.  Migros Ticaret AS

Trabzon Liman Isletm

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trabzon Liman Isletmeciligi are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Trabzon Liman demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Migros Ticaret AS

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Trabzon Liman and Migros Ticaret

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

The idea behind Trabzon Liman Isletmeciligi and Migros Ticaret AS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.