Correlation Between Turkiye Sise and Tofas Turk

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

By analyzing existing cross correlation between Turkiye Sise ve and Tofas Turk Otomobil, you can compare the effects of market volatilities on Turkiye Sise and Tofas Turk 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 Turkiye Sise with a short position of Tofas Turk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkiye Sise and Tofas Turk.

Diversification Opportunities for Turkiye Sise and Tofas Turk

0.88

Correlation Coefficient

Turkiye Sise  Tofas Turk

Very poor diversification

The 3 months correlation between Turkiye and Tofas is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Sise ve and Tofas Turk Otomobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tofas Turk Otomobil and Turkiye Sise 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 Turkiye Sise ve are associated (or correlated) with Tofas Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tofas Turk Otomobil has no effect on the direction of Turkiye Sise i.e., Turkiye Sise and Tofas Turk go up and down completely randomly.

Pair Corralation between Turkiye Sise and Tofas Turk

Assuming the 90 days trading horizon Turkiye Sise ve is expected to generate 0.77 times more return on investment than Tofas Turk. However, Turkiye Sise ve is 1.29 times less risky than Tofas Turk. It trades about -0.05 of its potential returns per unit of risk. Tofas Turk Otomobil is currently generating about -0.12 per unit of risk. If you would invest  4,356  in Turkiye Sise ve on September 2, 2024 and sell it today you would lose (300.00) from holding Turkiye Sise ve or give up 6.89% of portfolio value over 90 days.

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

Turkiye Sise ve  vs.  Tofas Turk Otomobil

Turkiye Sise ve

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turkiye Sise ve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Turkiye Sise is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Tofas Turk Otomobil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tofas Turk Otomobil 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.

Pair Trading with Turkiye Sise and Tofas Turk

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

The idea behind Turkiye Sise ve and Tofas Turk Otomobil 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.