Correlation Between Tofas Turk and Euro Kapital

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

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

Diversification Opportunities for Tofas Turk and Euro Kapital

0.37

Correlation Coefficient

Tofas Turk  Euro Kapital

Weak diversification

The 3 months correlation between Tofas and Euro is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Euro Kapital Yatirim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Kapital Yatirim and Tofas Turk 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 Tofas Turk Otomobil are associated (or correlated) with Euro Kapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Kapital Yatirim has no effect on the direction of Tofas Turk i.e., Tofas Turk and Euro Kapital go up and down completely randomly.

Pair Corralation between Tofas Turk and Euro Kapital

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to under-perform the Euro Kapital. But the stock apears to be less risky and, when comparing its historical volatility, Tofas Turk Otomobil is 1.44 times less risky than Euro Kapital. The stock trades about -0.09 of its potential returns per unit of risk. The Euro Kapital Yatirim is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,385  in Euro Kapital Yatirim on September 22, 2024 and sell it today you would earn a total of  51.00  from holding Euro Kapital Yatirim or generate 3.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Tofas Turk Otomobil  vs.  Euro Kapital Yatirim

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.

Euro Kapital Yatirim

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Tofas Turk and Euro Kapital

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

The idea behind Tofas Turk Otomobil and Euro Kapital Yatirim 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.