Correlation Between Tofas Turk and Aygaz AS

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

Diversification Opportunities for Tofas Turk and Aygaz AS

0.03

Correlation Coefficient

Tofas Turk  Aygaz AS

Significant diversification

The 3 months correlation between Tofas and Aygaz is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Aygaz AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aygaz 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 Aygaz AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aygaz AS has no effect on the direction of Tofas Turk i.e., Tofas Turk and Aygaz AS go up and down completely randomly.

Pair Corralation between Tofas Turk and Aygaz AS

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to under-perform the Aygaz AS. In addition to that, Tofas Turk is 1.31 times more volatile than Aygaz AS. It trades about -0.05 of its total potential returns per unit of risk. Aygaz AS is currently generating about 0.19 per unit of volatility. If you would invest  14,600  in Aygaz AS on September 13, 2024 and sell it today you would earn a total of  3,330  from holding Aygaz AS or generate 22.81% return on investment over 90 days.

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

Tofas Turk Otomobil  vs.  Aygaz 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 latest weak performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Aygaz AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aygaz AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Aygaz AS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tofas Turk and Aygaz AS

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

The idea behind Tofas Turk Otomobil and Aygaz 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.