Correlation Between Turk Telekomunikasyon and SwissCom

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

Diversification Opportunities for Turk Telekomunikasyon and SwissCom

0.65

Correlation Coefficient

Turk Telekomunikasyon  SwissCom

Poor diversification

The 3 months correlation between Turk and SwissCom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS and SwissCom AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SwissCom AG 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 SwissCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SwissCom AG has no effect on the direction of Turk Telekomunikasyon i.e., Turk Telekomunikasyon and SwissCom go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and SwissCom

Assuming the 90 days horizon Turk Telekomunikasyon AS is expected to generate 2.98 times more return on investment than SwissCom. However, Turk Telekomunikasyon is 2.98 times more volatile than SwissCom AG. It trades about 0.1 of its potential returns per unit of risk. SwissCom AG is currently generating about 0.11 per unit of risk. If you would invest  253.00  in Turk Telekomunikasyon AS on December 21, 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Turk Telekomunikasyon AS  vs.  SwissCom AG

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.

SwissCom AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SwissCom AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SwissCom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Turk Telekomunikasyon and SwissCom

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

The idea behind Turk Telekomunikasyon AS and SwissCom AG 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 Global Correlations module to find global opportunities by holding instruments from different markets.