Correlation Between Tofas Turk and Dogus Otomotiv

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

Diversification Opportunities for Tofas Turk and Dogus Otomotiv

0.65

Correlation Coefficient

Tofas Turk  Dogus Otomotiv

Poor diversification

The 3 months correlation between Tofas and Dogus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Dogus Otomotiv Servis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogus Otomotiv Servis 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 Dogus Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogus Otomotiv Servis has no effect on the direction of Tofas Turk i.e., Tofas Turk and Dogus Otomotiv go up and down completely randomly.

Pair Corralation between Tofas Turk and Dogus Otomotiv

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to generate 1.03 times more return on investment than Dogus Otomotiv. However, Tofas Turk is 1.03 times more volatile than Dogus Otomotiv Servis. It trades about 0.08 of its potential returns per unit of risk. Dogus Otomotiv Servis is currently generating about -0.02 per unit of risk. If you would invest  19,440  in Tofas Turk Otomobil on September 12, 2024 and sell it today you would earn a total of  670.00  from holding Tofas Turk Otomobil or generate 3.45% return on investment over 90 days.

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

Tofas Turk Otomobil  vs.  Dogus Otomotiv Servis

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 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.

Dogus Otomotiv Servis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dogus Otomotiv Servis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dogus Otomotiv 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 Dogus Otomotiv

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

The idea behind Tofas Turk Otomobil and Dogus Otomotiv Servis 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.