Correlation Between Tofas Turk and Turkiye Vakiflar

Can any of the company-specific risk be diversified away by investing in both Tofas Turk and Turkiye Vakiflar 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 Turkiye Vakiflar 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 Turkiye Vakiflar Bankasi, you can compare the effects of market volatilities on Tofas Turk and Turkiye Vakiflar 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 Turkiye Vakiflar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tofas Turk and Turkiye Vakiflar.

Diversification Opportunities for Tofas Turk and Turkiye Vakiflar

0.46

Correlation Coefficient

Tofas Turk  Turkiye Vakiflar

Very weak diversification

The 3 months correlation between Tofas and Turkiye is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tofas Turk Otomobil and Turkiye Vakiflar Bankasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Vakiflar Bankasi 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 Turkiye Vakiflar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Vakiflar Bankasi has no effect on the direction of Tofas Turk i.e., Tofas Turk and Turkiye Vakiflar go up and down completely randomly.

Pair Corralation between Tofas Turk and Turkiye Vakiflar

Assuming the 90 days trading horizon Tofas Turk Otomobil is expected to generate 1.22 times more return on investment than Turkiye Vakiflar. However, Tofas Turk is 1.22 times more volatile than Turkiye Vakiflar Bankasi. It trades about -0.14 of its potential returns per unit of risk. Turkiye Vakiflar Bankasi is currently generating about -0.23 per unit of risk. If you would invest  20,070  in Tofas Turk Otomobil on September 22, 2024 and sell it today you would lose (1,380) from holding Tofas Turk Otomobil or give up 6.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Tofas Turk Otomobil  vs.  Turkiye Vakiflar Bankasi

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.

Turkiye Vakiflar Bankasi

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tofas Turk and Turkiye Vakiflar

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

The idea behind Tofas Turk Otomobil and Turkiye Vakiflar Bankasi 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.