Correlation Between Petkim Petrokimya and EIS Eczacibasi

Can any of the company-specific risk be diversified away by investing in both Petkim Petrokimya and EIS Eczacibasi 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 Petkim Petrokimya and EIS Eczacibasi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petkim Petrokimya Holding and EIS Eczacibasi Ilac, you can compare the effects of market volatilities on Petkim Petrokimya and EIS Eczacibasi 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 Petkim Petrokimya with a short position of EIS Eczacibasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petkim Petrokimya and EIS Eczacibasi.

Diversification Opportunities for Petkim Petrokimya and EIS Eczacibasi

0.12

Correlation Coefficient

Petkim Petrokimya  EIS Eczacibasi

Average diversification

The 3 months correlation between Petkim and EIS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding and EIS Eczacibasi Ilac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EIS Eczacibasi Ilac and Petkim Petrokimya 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 Petkim Petrokimya Holding are associated (or correlated) with EIS Eczacibasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EIS Eczacibasi Ilac has no effect on the direction of Petkim Petrokimya i.e., Petkim Petrokimya and EIS Eczacibasi go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and EIS Eczacibasi

Assuming the 90 days trading horizon Petkim Petrokimya Holding is expected to under-perform the EIS Eczacibasi. But the stock apears to be less risky and, when comparing its historical volatility, Petkim Petrokimya Holding is 1.15 times less risky than EIS Eczacibasi. The stock trades about -0.16 of its potential returns per unit of risk. The EIS Eczacibasi Ilac is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,668  in EIS Eczacibasi Ilac on September 27, 2024 and sell it today you would earn a total of  172.00  from holding EIS Eczacibasi Ilac or generate 3.68% return on investment over 90 days.

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

Petkim Petrokimya Holding  vs.  EIS Eczacibasi Ilac

Petkim Petrokimya Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petkim Petrokimya Holding 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 forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

EIS Eczacibasi Ilac

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EIS Eczacibasi Ilac are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, EIS Eczacibasi is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Petkim Petrokimya and EIS Eczacibasi

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

The idea behind Petkim Petrokimya Holding and EIS Eczacibasi Ilac 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.