Correlation Between Tofas Turk and Turkiye Halk

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

Diversification Opportunities for Tofas Turk and Turkiye Halk

0.5

Correlation Coefficient

Tofas Turk  Turkiye Halk

Very weak diversification

The 3 months correlation between Tofas and Turkiye is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Turkiye Halk Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Halk Bankasi 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 Turkiye Halk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Halk Bankasi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Turkiye Halk go up and down completely randomly.

Pair Corralation between Tofas Turk and Turkiye Halk

Assuming the 90 days trading horizon Tofas Turk is expected to generate 1.18 times less return on investment than Turkiye Halk. In addition to that, Tofas Turk is 1.17 times more volatile than Turkiye Halk Bankasi. It trades about 0.06 of its total potential returns per unit of risk. Turkiye Halk Bankasi is currently generating about 0.08 per unit of volatility. If you would invest  1,589  in Turkiye Halk Bankasi on October 10, 2024 and sell it today you would earn a total of  137.00  from holding Turkiye Halk Bankasi or generate 8.62% return on investment over 90 days.

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

Tofas Turk Otomobil  vs.  Turkiye Halk Bankasi

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.

Turkiye Halk Bankasi

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Halk Bankasi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turkiye Halk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tofas Turk and Turkiye Halk

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

The idea behind Tofas Turk Otomobil and Turkiye Halk Bankasi 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.