Correlation Between Turkish Airlines and Konya Cimento

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

By analyzing existing cross correlation between Turkish Airlines and Konya Cimento Sanayi, you can compare the effects of market volatilities on Turkish Airlines and Konya Cimento 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 Turkish Airlines with a short position of Konya Cimento. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkish Airlines and Konya Cimento.

Diversification Opportunities for Turkish Airlines and Konya Cimento

0.77

Correlation Coefficient

Turkish Airlines  Konya Cimento

Poor diversification

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

Pair Corralation between Turkish Airlines and Konya Cimento

Assuming the 90 days trading horizon Turkish Airlines is expected to under-perform the Konya Cimento. But the stock apears to be less risky and, when comparing its historical volatility, Turkish Airlines is 1.58 times less risky than Konya Cimento. The stock trades about -0.01 of its potential returns per unit of risk. The Konya Cimento Sanayi is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  672,250  in Konya Cimento Sanayi on September 23, 2024 and sell it today you would earn a total of  28,750  from holding Konya Cimento Sanayi or generate 4.28% return on investment over 90 days.

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

Turkish Airlines  vs.  Konya Cimento Sanayi

Turkish Airlines

Risk-Adjusted Performance

0 of 100

Very Weak

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

Konya Cimento Sanayi

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Konya Cimento Sanayi are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Konya Cimento may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Turkish Airlines and Konya Cimento

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

The idea behind Turkish Airlines and Konya Cimento Sanayi 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.