Correlation Between Turk Traktor and Eregli Demir

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

By analyzing existing cross correlation between Turk Traktor ve and Eregli Demir ve, you can compare the effects of market volatilities on Turk Traktor and Eregli Demir 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 Traktor with a short position of Eregli Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turk Traktor and Eregli Demir.

Diversification Opportunities for Turk Traktor and Eregli Demir

0.42

Correlation Coefficient

Turk Traktor  Eregli Demir

Very weak diversification

The 3 months correlation between Turk and Eregli is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Turk Traktor ve and Eregli Demir ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eregli Demir ve and Turk Traktor 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 Traktor ve are associated (or correlated) with Eregli Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eregli Demir ve has no effect on the direction of Turk Traktor i.e., Turk Traktor and Eregli Demir go up and down completely randomly.

Pair Corralation between Turk Traktor and Eregli Demir

Assuming the 90 days trading horizon Turk Traktor ve is expected to generate 0.74 times more return on investment than Eregli Demir. However, Turk Traktor ve is 1.35 times less risky than Eregli Demir. It trades about 0.11 of its potential returns per unit of risk. Eregli Demir ve is currently generating about -0.04 per unit of risk. If you would invest  71,900  in Turk Traktor ve on December 30, 2024 and sell it today you would earn a total of  9,750  from holding Turk Traktor ve or generate 13.56% return on investment over 90 days.

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

Turk Traktor ve  vs.  Eregli Demir ve

Turk Traktor ve

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Traktor ve are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turk Traktor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Eregli Demir ve

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eregli Demir ve has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

Pair Trading with Turk Traktor and Eregli Demir

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

The idea behind Turk Traktor ve and Eregli Demir ve 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.