Correlation Between Tofas Turk and Desa Deri

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

Diversification Opportunities for Tofas Turk and Desa Deri

0.61

Correlation Coefficient

Tofas Turk  Desa Deri

Poor diversification

The 3 months correlation between Tofas and Desa is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Desa Deri Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desa Deri Sanayi 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 Desa Deri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desa Deri Sanayi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Desa Deri go up and down completely randomly.

Pair Corralation between Tofas Turk and Desa Deri

Assuming the 90 days trading horizon Tofas Turk is expected to generate 7.46 times less return on investment than Desa Deri. But when comparing it to its historical volatility, Tofas Turk Otomobil is 6.42 times less risky than Desa Deri. It trades about 0.04 of its potential returns per unit of risk. Desa Deri Sanayi is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,163  in Desa Deri Sanayi on October 10, 2024 and sell it today you would earn a total of  969.00  from holding Desa Deri Sanayi or generate 83.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Tofas Turk Otomobil  vs.  Desa Deri Sanayi

Tofas Turk Otomobil

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tofas Turk Otomobil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tofas Turk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Desa Deri Sanayi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Desa Deri Sanayi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Desa Deri is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tofas Turk and Desa Deri

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

The idea behind Tofas Turk Otomobil and Desa Deri Sanayi 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.