Correlation Between Turk Telekomunikasyon and KDDI Corp

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

By analyzing existing cross correlation between Turk Telekomunikasyon AS and KDDI Corp, you can compare the effects of market volatilities on Turk Telekomunikasyon and KDDI Corp 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 Turk Telekomunikasyon with a short position of KDDI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turk Telekomunikasyon and KDDI Corp.

Diversification Opportunities for Turk Telekomunikasyon and KDDI Corp

0.07

Correlation Coefficient

Turk Telekomunikasyon  KDDI Corp

Significant diversification

The 3 months correlation between Turk and KDDI is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS and KDDI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KDDI Corp and Turk Telekomunikasyon 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 Turk Telekomunikasyon AS are associated (or correlated) with KDDI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KDDI Corp has no effect on the direction of Turk Telekomunikasyon i.e., Turk Telekomunikasyon and KDDI Corp go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and KDDI Corp

Assuming the 90 days horizon Turk Telekomunikasyon AS is expected to generate 1.03 times more return on investment than KDDI Corp. However, Turk Telekomunikasyon is 1.03 times more volatile than KDDI Corp. It trades about 0.03 of its potential returns per unit of risk. KDDI Corp is currently generating about -0.04 per unit of risk. If you would invest  255.00  in Turk Telekomunikasyon AS on September 5, 2024 and sell it today you would earn a total of  9.00  from holding Turk Telekomunikasyon AS or generate 3.53% return on investment over 90 days.

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

Turk Telekomunikasyon AS  vs.  KDDI Corp

Turk Telekomunikasyon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Telekomunikasyon AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Turk Telekomunikasyon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

KDDI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KDDI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Turk Telekomunikasyon and KDDI Corp

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

The idea behind Turk Telekomunikasyon AS and KDDI Corp 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.