Correlation Between Koninklijke KPN and Turk Telekomunikasyon
Can any of the company-specific risk be diversified away by investing in both Koninklijke KPN 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 Koninklijke KPN and Turk Telekomunikasyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Koninklijke KPN NV and Turk Telekomunikasyon AS, you can compare the effects of market volatilities on Koninklijke KPN 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 Koninklijke KPN with a short position of Turk Telekomunikasyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koninklijke KPN and Turk Telekomunikasyon.
Diversification Opportunities for Koninklijke KPN and Turk Telekomunikasyon
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Koninklijke and Turk is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Koninklijke KPN NV and Turk Telekomunikasyon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Telekomunikasyon and Koninklijke KPN 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 Koninklijke KPN NV 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 Koninklijke KPN i.e., Koninklijke KPN and Turk Telekomunikasyon go up and down completely randomly.
Pair Corralation between Koninklijke KPN and Turk Telekomunikasyon
Assuming the 90 days horizon Koninklijke KPN is expected to generate 1.73 times less return on investment than Turk Telekomunikasyon. In addition to that, Koninklijke KPN is 1.31 times more volatile than Turk Telekomunikasyon AS. It trades about 0.01 of its total potential returns per unit of risk. Turk Telekomunikasyon AS is currently generating about 0.02 per unit of volatility. If you would invest 253.00 in Turk Telekomunikasyon AS on October 23, 2024 and sell it today you would earn a total of 1.00 from holding Turk Telekomunikasyon AS or generate 0.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Koninklijke KPN NV vs. Turk Telekomunikasyon AS
Performance |
| Timeline |
| Koninklijke KPN NV |
| Turk Telekomunikasyon |
Koninklijke KPN and Turk Telekomunikasyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Koninklijke KPN and Turk Telekomunikasyon
The main advantage of trading using opposite Koninklijke KPN and Turk Telekomunikasyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koninklijke KPN 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.| Koninklijke KPN vs. Turk Telekomunikasyon AS | Koninklijke KPN vs. Orange SA | Koninklijke KPN vs. Nippon Telegraph Telephone | Koninklijke KPN vs. SwissCom AG |
| Turk Telekomunikasyon vs. Turkiye Garanti Bankasi | Turk Telekomunikasyon vs. Akbank Turk Anonim | Turk Telekomunikasyon vs. Koc Holdings AS | Turk Telekomunikasyon vs. Anadolu Efes Biracilik |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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