Correlation Between Turkish Airlines and Pegasus Hava

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

By analyzing existing cross correlation between Turkish Airlines and Pegasus Hava Tasimaciligi, you can compare the effects of market volatilities on Turkish Airlines and Pegasus Hava 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 Pegasus Hava. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkish Airlines and Pegasus Hava.

Diversification Opportunities for Turkish Airlines and Pegasus Hava

0.03

Correlation Coefficient

Turkish Airlines  Pegasus Hava

Significant diversification

The 3 months correlation between Turkish and Pegasus is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and Pegasus Hava Tasimaciligi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Hava Tasimaciligi 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 Pegasus Hava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Hava Tasimaciligi has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and Pegasus Hava go up and down completely randomly.

Pair Corralation between Turkish Airlines and Pegasus Hava

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 0.92 times more return on investment than Pegasus Hava. However, Turkish Airlines is 1.09 times less risky than Pegasus Hava. It trades about -0.01 of its potential returns per unit of risk. Pegasus Hava Tasimaciligi is currently generating about -0.08 per unit of risk. If you would invest  29,600  in Turkish Airlines on September 23, 2024 and sell it today you would lose (625.00) from holding Turkish Airlines or give up 2.11% of portfolio value over 90 days.

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

Turkish Airlines  vs.  Pegasus Hava Tasimaciligi

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.

Pegasus Hava Tasimaciligi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pegasus Hava Tasimaciligi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Turkish Airlines and Pegasus Hava

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

The idea behind Turkish Airlines and Pegasus Hava Tasimaciligi 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.