Correlation Between Turk Telekomunikasyon and Alarko Carrier

Can any of the company-specific risk be diversified away by investing in both Turk Telekomunikasyon and Alarko Carrier 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 Turk Telekomunikasyon and Alarko Carrier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turk Telekomunikasyon AS and Alarko Carrier Sanayi, you can compare the effects of market volatilities on Turk Telekomunikasyon and Alarko Carrier 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 Turk Telekomunikasyon with a short position of Alarko Carrier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turk Telekomunikasyon and Alarko Carrier.

Diversification Opportunities for Turk Telekomunikasyon and Alarko Carrier

-0.85

Correlation Coefficient

Turk Telekomunikasyon  Alarko Carrier

Pay attention - limited upside

The 3 months correlation between Turk and Alarko is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS and Alarko Carrier Sanayi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarko Carrier Sanayi and Turk Telekomunikasyon 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 Turk Telekomunikasyon AS are associated (or correlated) with Alarko Carrier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alarko Carrier Sanayi has no effect on the direction of Turk Telekomunikasyon i.e., Turk Telekomunikasyon and Alarko Carrier go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and Alarko Carrier

Assuming the 90 days trading horizon Turk Telekomunikasyon AS is expected to generate 0.85 times more return on investment than Alarko Carrier. However, Turk Telekomunikasyon AS is 1.18 times less risky than Alarko Carrier. It trades about 0.29 of its potential returns per unit of risk. Alarko Carrier Sanayi is currently generating about -0.15 per unit of risk. If you would invest  3,154  in Turk Telekomunikasyon AS on March 7, 2024 and sell it today you would earn a total of  1,726  from holding Turk Telekomunikasyon AS or generate 54.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Turk Telekomunikasyon AS  vs.  Alarko Carrier Sanayi

Turk Telekomunikasyon

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Telekomunikasyon AS are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent primary indicators, Turk Telekomunikasyon demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Alarko Carrier Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alarko Carrier Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Turk Telekomunikasyon and Alarko Carrier

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

The idea behind Turk Telekomunikasyon AS and Alarko Carrier Sanayi 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.