Correlation Between Tofas Turk and AK Sigorta

Can any of the company-specific risk be diversified away by investing in both Tofas Turk and AK Sigorta 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 Tofas Turk and AK Sigorta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tofas Turk Otomobil and AK Sigorta AS, you can compare the effects of market volatilities on Tofas Turk and AK Sigorta 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 Tofas Turk with a short position of AK Sigorta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tofas Turk and AK Sigorta.

Diversification Opportunities for Tofas Turk and AK Sigorta

0.09

Correlation Coefficient

Tofas Turk  AK Sigorta

Significant diversification

The 3 months correlation between Tofas and AKGRT is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and AK Sigorta AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AK Sigorta AS and Tofas Turk 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 Tofas Turk Otomobil are associated (or correlated) with AK Sigorta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AK Sigorta AS has no effect on the direction of Tofas Turk i.e., Tofas Turk and AK Sigorta go up and down completely randomly.

Pair Corralation between Tofas Turk and AK Sigorta

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to under-perform the AK Sigorta. But the stock apears to be less risky and, when comparing its historical volatility, Tofas Turk Otomobil is 1.34 times less risky than AK Sigorta. The stock trades about -0.14 of its potential returns per unit of risk. The AK Sigorta AS is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  575.00  in AK Sigorta AS on September 22, 2024 and sell it today you would earn a total of  120.00  from holding AK Sigorta AS or generate 20.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Tofas Turk Otomobil  vs.  AK Sigorta AS

Tofas Turk Otomobil

Risk-Adjusted Performance

0 of 100

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 inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

AK Sigorta AS

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Tofas Turk and AK Sigorta

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

The idea behind Tofas Turk Otomobil and AK Sigorta 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.