Correlation Between Koza Anadolu and Turkish Airlines

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Can any of the company-specific risk be diversified away by investing in both Koza Anadolu and Turkish Airlines 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 Koza Anadolu and Turkish Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koza Anadolu Metal and Turkish Airlines, you can compare the effects of market volatilities on Koza Anadolu and Turkish Airlines 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 Koza Anadolu with a short position of Turkish Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koza Anadolu and Turkish Airlines.

Diversification Opportunities for Koza Anadolu and Turkish Airlines

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Koza and Turkish is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Koza Anadolu Metal and Turkish Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkish Airlines and Koza Anadolu 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 Koza Anadolu Metal are associated (or correlated) with Turkish Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkish Airlines has no effect on the direction of Koza Anadolu i.e., Koza Anadolu and Turkish Airlines go up and down completely randomly.

Pair Corralation between Koza Anadolu and Turkish Airlines

Assuming the 90 days trading horizon Koza Anadolu Metal is expected to generate 1.67 times more return on investment than Turkish Airlines. However, Koza Anadolu is 1.67 times more volatile than Turkish Airlines. It trades about 0.1 of its potential returns per unit of risk. Turkish Airlines is currently generating about 0.07 per unit of risk. If you would invest  5,920  in Koza Anadolu Metal on September 11, 2024 and sell it today you would earn a total of  1,125  from holding Koza Anadolu Metal or generate 19.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Koza Anadolu Metal  vs.  Turkish Airlines

 Performance 
       Timeline  
Koza Anadolu Metal 

Risk-Adjusted Performance

8 of 100

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

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Turkish Airlines are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turkish Airlines may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Koza Anadolu and Turkish Airlines Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Koza Anadolu and Turkish Airlines

The main advantage of trading using opposite Koza Anadolu and Turkish Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koza Anadolu position performs unexpectedly, Turkish Airlines 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 Turkish Airlines will offset losses from the drop in Turkish Airlines' long position.
The idea behind Koza Anadolu Metal and Turkish Airlines 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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