Correlation Between Koc Holding and Turkish Airlines

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

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

Diversification Opportunities for Koc Holding and Turkish Airlines

0.93

Correlation Coefficient

Koc Holding  Turkish Airlines

Almost no diversification

The 12 months correlation between Koc and Turkish is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Koc Holding AS and Turkish Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkish Airlines and Koc Holding 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 Koc Holding AS 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 Koc Holding i.e., Koc Holding and Turkish Airlines go up and down completely randomly.

Pair Corralation between Koc Holding and Turkish Airlines

Assuming the 90 days trading horizon Koc Holding AS is expected to generate 1.36 times more return on investment than Turkish Airlines. However, Koc Holding is 1.36 times more volatile than Turkish Airlines. It trades about 0.4 of its potential returns per unit of risk. Turkish Airlines is currently generating about 0.11 per unit of risk. If you would invest  20,891  in Koc Holding AS on February 16, 2024 and sell it today you would earn a total of  3,159  from holding Koc Holding AS or generate 15.12% return on investment over 90 days.

Time Period	12 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Koc Holding AS  vs.  Turkish Airlines

Koc Holding AS

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Koc Holding AS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Koc Holding 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 Koc Holding and Turkish Airlines

The main advantage of trading using opposite Koc Holding and Turkish Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Koc Holding 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 Koc Holding AS 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 Transaction History module to view history of all your transactions and understand their impact on performance.