Correlation Between Tofas Turk and Tekfen Holding

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

Diversification Opportunities for Tofas Turk and Tekfen Holding

-0.42

Correlation Coefficient

Tofas Turk  Tekfen Holding

Very good diversification

The 3 months correlation between Tofas and Tekfen is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Tekfen Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekfen Holding AS 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 Tekfen Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekfen Holding AS has no effect on the direction of Tofas Turk i.e., Tofas Turk and Tekfen Holding go up and down completely randomly.

Pair Corralation between Tofas Turk and Tekfen Holding

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to under-perform the Tekfen Holding. But the stock apears to be less risky and, when comparing its historical volatility, Tofas Turk Otomobil is 1.28 times less risky than Tekfen Holding. The stock trades about -0.03 of its potential returns per unit of risk. The Tekfen Holding AS is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5,190  in Tekfen Holding AS on September 12, 2024 and sell it today you would earn a total of  2,640  from holding Tekfen Holding AS or generate 50.87% return on investment over 90 days.

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

Tofas Turk Otomobil  vs.  Tekfen Holding AS

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 fairly strong forward indicators, Tofas Turk is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Tekfen Holding AS

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Tekfen Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tofas Turk and Tekfen Holding

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

The idea behind Tofas Turk Otomobil and Tekfen Holding AS 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.