Correlation Between Turk Telekomunikasyon and Aygaz AS

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

Diversification Opportunities for Turk Telekomunikasyon and Aygaz AS

-0.34

Correlation Coefficient

Turk Telekomunikasyon  Aygaz AS

Very good diversification

The 3 months correlation between Turk and Aygaz is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS and Aygaz AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aygaz AS 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 Aygaz AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aygaz AS has no effect on the direction of Turk Telekomunikasyon i.e., Turk Telekomunikasyon and Aygaz AS go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and Aygaz AS

Assuming the 90 days trading horizon Turk Telekomunikasyon AS is expected to under-perform the Aygaz AS. But the stock apears to be less risky and, when comparing its historical volatility, Turk Telekomunikasyon AS is 1.18 times less risky than Aygaz AS. The stock trades about -0.06 of its potential returns per unit of risk. The Aygaz AS is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  15,180  in Aygaz AS on September 5, 2024 and sell it today you would earn a total of  2,660  from holding Aygaz AS or generate 17.52% return on investment over 90 days.

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

Turk Telekomunikasyon AS  vs.  Aygaz AS

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. 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.

Aygaz AS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aygaz AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Aygaz AS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turk Telekomunikasyon and Aygaz AS

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

The idea behind Turk Telekomunikasyon AS and Aygaz 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.