Correlation Between KDDI Corp and Turk Telekomunikasyon

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

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

Diversification Opportunities for KDDI Corp and Turk Telekomunikasyon

0.07

Correlation Coefficient

KDDI Corp  Turk Telekomunikasyon

Significant diversification

The 3 months correlation between KDDI and Turk is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding KDDI Corp and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and KDDI Corp 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 KDDI Corp are associated (or correlated) with Turk Telekomunikasyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turk Telekomunikasyon has no effect on the direction of KDDI Corp i.e., KDDI Corp and Turk Telekomunikasyon go up and down completely randomly.

Pair Corralation between KDDI Corp and Turk Telekomunikasyon

Assuming the 90 days horizon KDDI Corp is expected to under-perform the Turk Telekomunikasyon. But the pink sheet apears to be less risky and, when comparing its historical volatility, KDDI Corp is 1.03 times less risky than Turk Telekomunikasyon. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Turk Telekomunikasyon AS is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  255.00  in Turk Telekomunikasyon AS on September 5, 2024 and sell it today you would earn a total of  9.00  from holding Turk Telekomunikasyon AS or generate 3.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

KDDI Corp  vs.  Turk Telekomunikasyon AS

KDDI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Turk Telekomunikasyon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Telekomunikasyon AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Turk Telekomunikasyon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with KDDI Corp and Turk Telekomunikasyon

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

The idea behind KDDI Corp and Turk Telekomunikasyon 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.