Correlation Between Turk Telekomunikasyon and Telefnica

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

Diversification Opportunities for Turk Telekomunikasyon and Telefnica

0.4

Correlation Coefficient

Turk Telekomunikasyon  Telefnica

Very weak diversification

The 3 months correlation between Turk and Telefnica is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS and Telefnica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telefnica SA 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 Telefnica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telefnica SA has no effect on the direction of Turk Telekomunikasyon i.e., Turk Telekomunikasyon and Telefnica go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and Telefnica

Assuming the 90 days horizon Turk Telekomunikasyon AS is expected to generate 0.28 times more return on investment than Telefnica. However, Turk Telekomunikasyon AS is 3.62 times less risky than Telefnica. It trades about -0.12 of its potential returns per unit of risk. Telefnica SA is currently generating about -0.06 per unit of risk. If you would invest  275.00  in Turk Telekomunikasyon AS on October 24, 2024 and sell it today you would lose (21.00) from holding Turk Telekomunikasyon AS or give up 7.64% of portfolio value over 90 days.

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

Turk Telekomunikasyon AS  vs.  Telefnica SA

Turk Telekomunikasyon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turk Telekomunikasyon AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Telefnica SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telefnica SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Turk Telekomunikasyon and Telefnica

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

The idea behind Turk Telekomunikasyon AS and Telefnica SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..