Correlation Between Tofas Turk and Vestel Elektronik

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

Diversification Opportunities for Tofas Turk and Vestel Elektronik

0.63

Correlation Coefficient

Tofas Turk  Vestel Elektronik

Poor diversification

The 3 months correlation between Tofas and Vestel is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Vestel Elektronik Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestel Elektronik 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 Vestel Elektronik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestel Elektronik Sanayi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Vestel Elektronik go up and down completely randomly.

Pair Corralation between Tofas Turk and Vestel Elektronik

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to generate 1.0 times more return on investment than Vestel Elektronik. However, Tofas Turk is 1.0 times more volatile than Vestel Elektronik Sanayi. It trades about -0.05 of its potential returns per unit of risk. Vestel Elektronik Sanayi is currently generating about -0.19 per unit of risk. If you would invest  20,090  in Tofas Turk Otomobil on December 30, 2024 and sell it today you would lose (2,160) from holding Tofas Turk Otomobil or give up 10.75% 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.  Vestel Elektronik Sanayi

Tofas Turk Otomobil

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Vestel Elektronik Sanayi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vestel Elektronik Sanayi 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 April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Tofas Turk and Vestel Elektronik

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

The idea behind Tofas Turk Otomobil and Vestel Elektronik 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.