Correlation Between Tofas Turk and TAV Havalimanlari

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

Diversification Opportunities for Tofas Turk and TAV Havalimanlari

0.53

Correlation Coefficient

Tofas Turk  TAV Havalimanlari

Very weak diversification

The 3 months correlation between Tofas and TAV is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and TAV Havalimanlari Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAV Havalimanlari Holding 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 TAV Havalimanlari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAV Havalimanlari Holding has no effect on the direction of Tofas Turk i.e., Tofas Turk and TAV Havalimanlari go up and down completely randomly.

Pair Corralation between Tofas Turk and TAV Havalimanlari

Assuming the 90 days trading horizon Tofas Turk is expected to generate 1.75 times less return on investment than TAV Havalimanlari. In addition to that, Tofas Turk is 1.33 times more volatile than TAV Havalimanlari Holding. It trades about 0.09 of its total potential returns per unit of risk. TAV Havalimanlari Holding is currently generating about 0.2 per unit of volatility. If you would invest  22,660  in TAV Havalimanlari Holding on October 23, 2024 and sell it today you would earn a total of  5,615  from holding TAV Havalimanlari Holding or generate 24.78% 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.  TAV Havalimanlari Holding

Tofas Turk Otomobil

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tofas Turk Otomobil are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tofas Turk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

TAV Havalimanlari Holding

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TAV Havalimanlari Holding are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, TAV Havalimanlari demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tofas Turk and TAV Havalimanlari

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

The idea behind Tofas Turk Otomobil and TAV Havalimanlari Holding 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.