Correlation Between Turkiye Halk and Turkish Airlines

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

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

Diversification Opportunities for Turkiye Halk and Turkish Airlines

0.61

Correlation Coefficient

Turkiye Halk  Turkish Airlines

Poor diversification

The 3 months correlation between Turkiye and Turkish is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Halk Bankasi and Turkish Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkish Airlines and Turkiye Halk 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 Turkiye Halk Bankasi are associated (or correlated) with Turkish Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkish Airlines has no effect on the direction of Turkiye Halk i.e., Turkiye Halk and Turkish Airlines go up and down completely randomly.

Pair Corralation between Turkiye Halk and Turkish Airlines

Assuming the 90 days trading horizon Turkiye Halk Bankasi is expected to generate 2.31 times more return on investment than Turkish Airlines. However, Turkiye Halk is 2.31 times more volatile than Turkish Airlines. It trades about 0.25 of its potential returns per unit of risk. Turkish Airlines is currently generating about 0.12 per unit of risk. If you would invest  1,306  in Turkiye Halk Bankasi on January 30, 2024 and sell it today you would earn a total of  286.00  from holding Turkiye Halk Bankasi or generate 21.9% return on investment over 90 days.

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

Turkiye Halk Bankasi  vs.  Turkish Airlines

Turkiye Halk Bankasi

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turkiye Halk Bankasi are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental drivers, Turkiye Halk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Turkish Airlines

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turkish Airlines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Turkish Airlines demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turkiye Halk and Turkish Airlines

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

The idea behind Turkiye Halk Bankasi and Turkish Airlines 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.