Correlation Between Eregli Demir and Turk Telekomunikasyon

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Can any of the company-specific risk be diversified away by investing in both Eregli Demir and Turk Telekomunikasyon 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 Eregli Demir and Turk Telekomunikasyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eregli Demir ve and Turk Telekomunikasyon AS, you can compare the effects of market volatilities on Eregli Demir and Turk Telekomunikasyon 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 Eregli Demir with a short position of Turk Telekomunikasyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eregli Demir and Turk Telekomunikasyon.

Diversification Opportunities for Eregli Demir and Turk Telekomunikasyon

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Eregli and Turk is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eregli Demir ve and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and Eregli Demir 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 Eregli Demir ve are associated (or correlated) with Turk Telekomunikasyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turk Telekomunikasyon has no effect on the direction of Eregli Demir i.e., Eregli Demir and Turk Telekomunikasyon go up and down completely randomly.

Pair Corralation between Eregli Demir and Turk Telekomunikasyon

Assuming the 90 days trading horizon Eregli Demir ve is expected to generate 1.01 times more return on investment than Turk Telekomunikasyon. However, Eregli Demir is 1.01 times more volatile than Turk Telekomunikasyon AS. It trades about 0.14 of its potential returns per unit of risk. Turk Telekomunikasyon AS is currently generating about -0.08 per unit of risk. If you would invest  2,392  in Eregli Demir ve on August 31, 2024 and sell it today you would earn a total of  130.00  from holding Eregli Demir ve or generate 5.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Eregli Demir ve  vs.  Turk Telekomunikasyon AS

 Performance 
       Timeline  
Eregli Demir ve 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Eregli Demir ve are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Eregli Demir is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.
Turk Telekomunikasyon 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Turk Telekomunikasyon AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Eregli Demir and Turk Telekomunikasyon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eregli Demir and Turk Telekomunikasyon

The main advantage of trading using opposite Eregli Demir and Turk Telekomunikasyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eregli Demir position performs unexpectedly, Turk Telekomunikasyon 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 Turk Telekomunikasyon will offset losses from the drop in Turk Telekomunikasyon's long position.
The idea behind Eregli Demir ve and Turk Telekomunikasyon AS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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