Correlation Between Turkish Airlines and Eregli Demir

Can any of the company-specific risk be diversified away by investing in both Turkish Airlines and Eregli Demir 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 Turkish Airlines and Eregli Demir into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turkish Airlines and Eregli Demir ve, you can compare the effects of market volatilities on Turkish Airlines and Eregli Demir 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 Turkish Airlines with a short position of Eregli Demir. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkish Airlines and Eregli Demir.

Diversification Opportunities for Turkish Airlines and Eregli Demir

0.05

Correlation Coefficient

Turkish Airlines  Eregli Demir

Significant diversification

The 3 months correlation between Turkish and Eregli is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Turkish Airlines and Eregli Demir ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eregli Demir ve and Turkish Airlines 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 Turkish Airlines are associated (or correlated) with Eregli Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eregli Demir ve has no effect on the direction of Turkish Airlines i.e., Turkish Airlines and Eregli Demir go up and down completely randomly.

Pair Corralation between Turkish Airlines and Eregli Demir

Assuming the 90 days trading horizon Turkish Airlines is expected to generate 22.76 times less return on investment than Eregli Demir. But when comparing it to its historical volatility, Turkish Airlines is 1.14 times less risky than Eregli Demir. It trades about 0.02 of its potential returns per unit of risk. Eregli Demir ve is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  4,280  in Eregli Demir ve on February 26, 2024 and sell it today you would earn a total of  662.00  from holding Eregli Demir ve or generate 15.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Turkish Airlines  vs.  Eregli Demir ve

Turkish Airlines

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turkish Airlines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Turkish Airlines may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Eregli Demir ve

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eregli Demir ve are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Eregli Demir may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Turkish Airlines and Eregli Demir

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

The idea behind Turkish Airlines and Eregli Demir ve 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.