Correlation Between Akbank Turk and Lloyds Banking

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

By analyzing existing cross correlation between Akbank Turk Anonim and Lloyds Banking Group, you can compare the effects of market volatilities on Akbank Turk and Lloyds Banking 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 Akbank Turk with a short position of Lloyds Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akbank Turk and Lloyds Banking.

Diversification Opportunities for Akbank Turk and Lloyds Banking

0.22

Correlation Coefficient

Akbank Turk  Lloyds Banking

Modest diversification

The 3 months correlation between Akbank and Lloyds is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Akbank Turk Anonim and Lloyds Banking Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lloyds Banking Group and Akbank Turk 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 Akbank Turk Anonim are associated (or correlated) with Lloyds Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lloyds Banking Group has no effect on the direction of Akbank Turk i.e., Akbank Turk and Lloyds Banking go up and down completely randomly.

Pair Corralation between Akbank Turk and Lloyds Banking

Assuming the 90 days horizon Akbank Turk Anonim is expected to generate 2.62 times more return on investment than Lloyds Banking. However, Akbank Turk is 2.62 times more volatile than Lloyds Banking Group. It trades about 0.16 of its potential returns per unit of risk. Lloyds Banking Group is currently generating about -0.1 per unit of risk. If you would invest  309.00  in Akbank Turk Anonim on September 2, 2024 and sell it today you would earn a total of  37.00  from holding Akbank Turk Anonim or generate 11.97% return on investment over 90 days.

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

Akbank Turk Anonim  vs.  Lloyds Banking Group

Akbank Turk Anonim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akbank Turk Anonim has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Akbank Turk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lloyds Banking Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lloyds Banking Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Akbank Turk and Lloyds Banking

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

The idea behind Akbank Turk Anonim and Lloyds Banking Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..