Correlation Between Turkiye Garanti and PT Bank

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

By analyzing existing cross correlation between Turkiye Garanti Bankasi and PT Bank Central, you can compare the effects of market volatilities on Turkiye Garanti and PT Bank 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 Garanti with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkiye Garanti and PT Bank.

Diversification Opportunities for Turkiye Garanti and PT Bank

0.27

Correlation Coefficient

Turkiye Garanti  PT Bank

Modest diversification

The 3 months correlation between Turkiye and PBCRF is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Garanti Bankasi and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central and Turkiye Garanti 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 Garanti Bankasi are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Central has no effect on the direction of Turkiye Garanti i.e., Turkiye Garanti and PT Bank go up and down completely randomly.

Pair Corralation between Turkiye Garanti and PT Bank

Assuming the 90 days horizon Turkiye Garanti Bankasi is expected to generate 0.89 times more return on investment than PT Bank. However, Turkiye Garanti Bankasi is 1.12 times less risky than PT Bank. It trades about 0.05 of its potential returns per unit of risk. PT Bank Central is currently generating about 0.02 per unit of risk. If you would invest  330.00  in Turkiye Garanti Bankasi on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Turkiye Garanti Bankasi or generate 7.58% return on investment over 90 days.

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

Turkiye Garanti Bankasi  vs.  PT Bank Central

Turkiye Garanti Bankasi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Garanti Bankasi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Turkiye Garanti may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Bank Central

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Central are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Turkiye Garanti and PT Bank

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

The idea behind Turkiye Garanti Bankasi and PT Bank Central 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.