Correlation Between Tofas Turk and Turkiye Is

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

Diversification Opportunities for Tofas Turk and Turkiye Is

0.71

Correlation Coefficient

Tofas Turk  Turkiye Is

Poor diversification

The 3 months correlation between Tofas and Turkiye is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Turkiye Is Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Is 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 Is. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Is Bankasi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Turkiye Is go up and down completely randomly.

Pair Corralation between Tofas Turk and Turkiye Is

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to under-perform the Turkiye Is. In addition to that, Tofas Turk is 1.68 times more volatile than Turkiye Is Bankasi. It trades about -0.22 of its total potential returns per unit of risk. Turkiye Is Bankasi is currently generating about -0.12 per unit of volatility. If you would invest  1,360  in Turkiye Is Bankasi on September 23, 2024 and sell it today you would lose (45.00) from holding Turkiye Is Bankasi or give up 3.31% of portfolio value over 90 days.

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

Tofas Turk Otomobil  vs.  Turkiye Is Bankasi

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 inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Turkiye Is Bankasi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turkiye Is Bankasi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Turkiye Is is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tofas Turk and Turkiye Is

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

The idea behind Tofas Turk Otomobil and Turkiye Is 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.