Correlation Between Tofas Turk and Soktas Tekstil

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

Diversification Opportunities for Tofas Turk and Soktas Tekstil

-0.06

Correlation Coefficient

Tofas Turk  Soktas Tekstil

Good diversification

The 3 months correlation between Tofas and Soktas is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Soktas Tekstil Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soktas Tekstil 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 Soktas Tekstil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soktas Tekstil Sanayi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Soktas Tekstil go up and down completely randomly.

Pair Corralation between Tofas Turk and Soktas Tekstil

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to generate 0.72 times more return on investment than Soktas Tekstil. However, Tofas Turk Otomobil is 1.38 times less risky than Soktas Tekstil. It trades about 0.03 of its potential returns per unit of risk. Soktas Tekstil Sanayi is currently generating about 0.01 per unit of risk. If you would invest  15,435  in Tofas Turk Otomobil on September 23, 2024 and sell it today you would earn a total of  3,255  from holding Tofas Turk Otomobil or generate 21.09% 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.  Soktas Tekstil Sanayi

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.

Soktas Tekstil Sanayi

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Soktas Tekstil Sanayi are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Soktas Tekstil is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Tofas Turk and Soktas Tekstil

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

The idea behind Tofas Turk Otomobil and Soktas Tekstil 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.