Correlation Between Citigroup and Tekfen Holding

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

By analyzing existing cross correlation between Citigroup and Tekfen Holding AS, you can compare the effects of market volatilities on Citigroup and Tekfen Holding 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 Citigroup with a short position of Tekfen Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citigroup and Tekfen Holding.

Diversification Opportunities for Citigroup and Tekfen Holding

0.81

Correlation Coefficient

Citigroup  Tekfen Holding

Very poor diversification

The 3 months correlation between Citigroup and Tekfen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Citigroup and Tekfen Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekfen Holding AS and Citigroup 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 Citigroup are associated (or correlated) with Tekfen Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekfen Holding AS has no effect on the direction of Citigroup i.e., Citigroup and Tekfen Holding go up and down completely randomly.

Pair Corralation between Citigroup and Tekfen Holding

Taking into account the 90-day investment horizon Citigroup is expected to generate 1.54 times less return on investment than Tekfen Holding. But when comparing it to its historical volatility, Citigroup is 1.61 times less risky than Tekfen Holding. It trades about 0.19 of its potential returns per unit of risk. Tekfen Holding AS is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,470  in Tekfen Holding AS on September 14, 2024 and sell it today you would earn a total of  2,095  from holding Tekfen Holding AS or generate 38.3% return on investment over 90 days.

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

Citigroup  vs.  Tekfen Holding AS

Citigroup

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citigroup are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Citigroup exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tekfen Holding AS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tekfen Holding AS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tekfen Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Citigroup and Tekfen Holding

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

The idea behind Citigroup and Tekfen Holding 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.