Correlation Between DO AG and Turcas Petrol

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Can any of the company-specific risk be diversified away by investing in both DO AG and Turcas Petrol 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 DO AG and Turcas Petrol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DO AG and Turcas Petrol AS, you can compare the effects of market volatilities on DO AG and Turcas Petrol 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 DO AG with a short position of Turcas Petrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of DO AG and Turcas Petrol.

Diversification Opportunities for DO AG and Turcas Petrol

DOCOTurcasDiversified AwayDOCOTurcasDiversified Away100%
0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between DOCO and Turcas is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding DO AG and Turcas Petrol AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turcas Petrol AS and DO AG 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 DO AG are associated (or correlated) with Turcas Petrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turcas Petrol AS has no effect on the direction of DO AG i.e., DO AG and Turcas Petrol go up and down completely randomly.

Pair Corralation between DO AG and Turcas Petrol

Assuming the 90 days trading horizon DO AG is expected to generate 1.15 times more return on investment than Turcas Petrol. However, DO AG is 1.15 times more volatile than Turcas Petrol AS. It trades about 0.16 of its potential returns per unit of risk. Turcas Petrol AS is currently generating about 0.14 per unit of risk. If you would invest  512,000  in DO AG on September 30, 2024 and sell it today you would earn a total of  142,500  from holding DO AG or generate 27.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

DO AG  vs.  Turcas Petrol AS

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10-50510152025
JavaScript chart by amCharts 3.21.15DOCO TRCAS
       Timeline  
DO AG 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in DO AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, DO AG unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecDec5,0005,5006,0006,500
Turcas Petrol AS 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Turcas Petrol AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turcas Petrol demonstrated solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecDec21222324252627

DO AG and Turcas Petrol Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-7.66-5.74-3.81-1.890.03211.994.066.128.1810.25 0.010.020.030.040.050.060.070.08
JavaScript chart by amCharts 3.21.15DOCO TRCAS
       Returns  

Pair Trading with DO AG and Turcas Petrol

The main advantage of trading using opposite DO AG and Turcas Petrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DO AG position performs unexpectedly, Turcas Petrol 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 Turcas Petrol will offset losses from the drop in Turcas Petrol's long position.
The idea behind DO AG and Turcas Petrol AS 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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