Correlation Between Makina Takim and Turkiye Petrol

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

By analyzing existing cross correlation between Makina Takim Endustrisi and Turkiye Petrol Rafinerileri, you can compare the effects of market volatilities on Makina Takim and Turkiye 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 Makina Takim with a short position of Turkiye Petrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makina Takim and Turkiye Petrol.

Diversification Opportunities for Makina Takim and Turkiye Petrol

0.58

Correlation Coefficient

Makina Takim  Turkiye Petrol

Very weak diversification

The 3 months correlation between Makina and Turkiye is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Makina Takim Endustrisi and Turkiye Petrol Rafinerileri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turkiye Petrol Rafin and Makina Takim 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 Makina Takim Endustrisi are associated (or correlated) with Turkiye Petrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turkiye Petrol Rafin has no effect on the direction of Makina Takim i.e., Makina Takim and Turkiye Petrol go up and down completely randomly.

Pair Corralation between Makina Takim and Turkiye Petrol

Assuming the 90 days trading horizon Makina Takim Endustrisi is expected to generate 1.9 times more return on investment than Turkiye Petrol. However, Makina Takim is 1.9 times more volatile than Turkiye Petrol Rafinerileri. It trades about 0.01 of its potential returns per unit of risk. Turkiye Petrol Rafinerileri is currently generating about -0.08 per unit of risk. If you would invest  679.00  in Makina Takim Endustrisi on September 22, 2024 and sell it today you would lose (5.00) from holding Makina Takim Endustrisi or give up 0.74% of portfolio value over 90 days.

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

Makina Takim Endustrisi  vs.  Turkiye Petrol Rafinerileri

Makina Takim Endustrisi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makina Takim Endustrisi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Makina Takim is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Turkiye Petrol Rafin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turkiye Petrol Rafinerileri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Makina Takim and Turkiye Petrol

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

The idea behind Makina Takim Endustrisi and Turkiye Petrol Rafinerileri 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.