Correlation Between Turk Telekomunikasyon and Nippon Telegraph

Can any of the company-specific risk be diversified away by investing in both Turk Telekomunikasyon and Nippon Telegraph 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 Turk Telekomunikasyon and Nippon Telegraph into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turk Telekomunikasyon AS and Nippon Telegraph Telephone, you can compare the effects of market volatilities on Turk Telekomunikasyon and Nippon Telegraph 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 Turk Telekomunikasyon with a short position of Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turk Telekomunikasyon and Nippon Telegraph.

Diversification Opportunities for Turk Telekomunikasyon and Nippon Telegraph

-0.16

Correlation Coefficient

Turk Telekomunikasyon  Nippon Telegraph

Good diversification

The 3 months correlation between Turk and Nippon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS and Nippon Telegraph Telephone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph Tel and Turk Telekomunikasyon 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 Turk Telekomunikasyon AS are associated (or correlated) with Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph Tel has no effect on the direction of Turk Telekomunikasyon i.e., Turk Telekomunikasyon and Nippon Telegraph go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and Nippon Telegraph

Assuming the 90 days horizon Turk Telekomunikasyon AS is expected to generate 0.74 times more return on investment than Nippon Telegraph. However, Turk Telekomunikasyon AS is 1.35 times less risky than Nippon Telegraph. It trades about 0.1 of its potential returns per unit of risk. Nippon Telegraph Telephone is currently generating about 0.03 per unit of risk. If you would invest  253.00  in Turk Telekomunikasyon AS on December 20, 2024 and sell it today you would earn a total of  41.00  from holding Turk Telekomunikasyon AS or generate 16.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Turk Telekomunikasyon AS  vs.  Nippon Telegraph Telephone

Turk Telekomunikasyon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Telekomunikasyon AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Turk Telekomunikasyon showed solid returns over the last few months and may actually be approaching a breakup point.

Nippon Telegraph Tel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Telegraph Telephone are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nippon Telegraph may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Turk Telekomunikasyon and Nippon Telegraph

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

The idea behind Turk Telekomunikasyon AS and Nippon Telegraph Telephone 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.