Correlation Between Trabzon Liman and Akbank TAS

Can any of the company-specific risk be diversified away by investing in both Trabzon Liman and Akbank TAS 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 Trabzon Liman and Akbank TAS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trabzon Liman Isletmeciligi and Akbank TAS, you can compare the effects of market volatilities on Trabzon Liman and Akbank TAS 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 Trabzon Liman with a short position of Akbank TAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trabzon Liman and Akbank TAS.

Diversification Opportunities for Trabzon Liman and Akbank TAS

0.68

Correlation Coefficient

Trabzon Liman  Akbank TAS

Poor diversification

The 3 months correlation between Trabzon and Akbank is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Trabzon Liman Isletmeciligi and Akbank TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbank TAS and Trabzon Liman 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 Trabzon Liman Isletmeciligi are associated (or correlated) with Akbank TAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbank TAS has no effect on the direction of Trabzon Liman i.e., Trabzon Liman and Akbank TAS go up and down completely randomly.

Pair Corralation between Trabzon Liman and Akbank TAS

Assuming the 90 days trading horizon Trabzon Liman is expected to generate 2.18 times less return on investment than Akbank TAS. But when comparing it to its historical volatility, Trabzon Liman Isletmeciligi is 1.2 times less risky than Akbank TAS. It trades about 0.04 of its potential returns per unit of risk. Akbank TAS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,660  in Akbank TAS on September 13, 2024 and sell it today you would earn a total of  730.00  from holding Akbank TAS or generate 12.9% return on investment over 90 days.

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

Trabzon Liman Isletmeciligi  vs.  Akbank TAS

Trabzon Liman Isletm

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trabzon Liman Isletmeciligi are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Trabzon Liman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Akbank TAS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akbank TAS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Akbank TAS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trabzon Liman and Akbank TAS

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

The idea behind Trabzon Liman Isletmeciligi and Akbank TAS 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.