Correlation Between Tofas Turk and Ford Otomotiv

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

Diversification Opportunities for Tofas Turk and Ford Otomotiv

-0.32

Correlation Coefficient

Tofas Turk  Ford Otomotiv

Very good diversification

The 3 months correlation between Tofas and Ford is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Ford Otomotiv Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ford Otomotiv 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 Ford Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ford Otomotiv Sanayi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Ford Otomotiv go up and down completely randomly.

Pair Corralation between Tofas Turk and Ford Otomotiv

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to under-perform the Ford Otomotiv. In addition to that, Tofas Turk is 1.35 times more volatile than Ford Otomotiv Sanayi. It trades about -0.05 of its total potential returns per unit of risk. Ford Otomotiv Sanayi is currently generating about 0.1 per unit of volatility. If you would invest  93,950  in Ford Otomotiv Sanayi on December 30, 2024 and sell it today you would earn a total of  11,950  from holding Ford Otomotiv Sanayi or generate 12.72% return on investment over 90 days.

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

Tofas Turk Otomobil  vs.  Ford Otomotiv Sanayi

Tofas Turk Otomobil

Risk-Adjusted Performance

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 inconsistent 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.

Ford Otomotiv Sanayi

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ford Otomotiv Sanayi are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ford Otomotiv demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tofas Turk and Ford Otomotiv

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

The idea behind Tofas Turk Otomobil and Ford Otomotiv 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.