Correlation Between QNB Finans and Garanti Faktoring

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

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

Diversification Opportunities for QNB Finans and Garanti Faktoring

0.09

Correlation Coefficient

QNB Finans  Garanti Faktoring

Significant diversification

The 3 months correlation between QNB and Garanti is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding QNB Finans Finansal and Garanti Faktoring AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garanti Faktoring and QNB Finans 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 QNB Finans Finansal are associated (or correlated) with Garanti Faktoring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garanti Faktoring has no effect on the direction of QNB Finans i.e., QNB Finans and Garanti Faktoring go up and down completely randomly.

Pair Corralation between QNB Finans and Garanti Faktoring

Assuming the 90 days trading horizon QNB Finans Finansal is expected to under-perform the Garanti Faktoring. In addition to that, QNB Finans is 3.48 times more volatile than Garanti Faktoring AS. It trades about -0.14 of its total potential returns per unit of risk. Garanti Faktoring AS is currently generating about -0.03 per unit of volatility. If you would invest  2,094  in Garanti Faktoring AS on September 13, 2024 and sell it today you would lose (96.00) from holding Garanti Faktoring AS or give up 4.58% of portfolio value over 90 days.

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

QNB Finans Finansal  vs.  Garanti Faktoring AS

QNB Finans Finansal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days QNB Finans Finansal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Garanti Faktoring

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Garanti Faktoring AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Garanti Faktoring is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with QNB Finans and Garanti Faktoring

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

The idea behind QNB Finans Finansal and Garanti Faktoring 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.