Correlation Between QNB Finans and Turk Traktor

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

By analyzing existing cross correlation between QNB Finans Finansal and Turk Traktor ve, you can compare the effects of market volatilities on QNB Finans and Turk Traktor 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 QNB Finans with a short position of Turk Traktor. Check out your portfolio center. Please also check ongoing floating volatility patterns of QNB Finans and Turk Traktor.

Diversification Opportunities for QNB Finans and Turk Traktor

0.72

Correlation Coefficient

QNB Finans  Turk Traktor

Poor diversification

The 3 months correlation between QNB and Turk is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding QNB Finans Finansal and Turk Traktor ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turk Traktor ve and QNB Finans 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 QNB Finans Finansal are associated (or correlated) with Turk Traktor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turk Traktor ve has no effect on the direction of QNB Finans i.e., QNB Finans and Turk Traktor go up and down completely randomly.

Pair Corralation between QNB Finans and Turk Traktor

Assuming the 90 days trading horizon QNB Finans Finansal is expected to under-perform the Turk Traktor. In addition to that, QNB Finans is 2.27 times more volatile than Turk Traktor ve. It trades about -0.03 of its total potential returns per unit of risk. Turk Traktor ve is currently generating about 0.25 per unit of volatility. If you would invest  87,800  in Turk Traktor ve on February 4, 2024 and sell it today you would earn a total of  6,400  from holding Turk Traktor ve or generate 7.29% return on investment over 90 days.

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

QNB Finans Finansal  vs.  Turk Traktor ve

QNB Finans Finansal

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Finans Finansal are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, QNB Finans demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Turk Traktor ve

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with QNB Finans and Turk Traktor

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

The idea behind QNB Finans Finansal and Turk Traktor 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.