Correlation Between Petkim Petrokimya and Turcas Petrol

Can any of the company-specific risk be diversified away by investing in both Petkim Petrokimya 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 Petkim Petrokimya and Turcas Petrol 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 Turcas Petrol AS, you can compare the effects of market volatilities on Petkim Petrokimya 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 Petkim Petrokimya with a short position of Turcas Petrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petkim Petrokimya and Turcas Petrol.

Diversification Opportunities for Petkim Petrokimya and Turcas Petrol

0.15

Correlation Coefficient

Petkim Petrokimya  Turcas Petrol

Average diversification

The 3 months correlation between Petkim and Turcas is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding 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 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 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 Petkim Petrokimya i.e., Petkim Petrokimya and Turcas Petrol go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and Turcas Petrol

Assuming the 90 days trading horizon Petkim Petrokimya is expected to generate 3.88 times less return on investment than Turcas Petrol. But when comparing it to its historical volatility, Petkim Petrokimya Holding is 1.21 times less risky than Turcas Petrol. It trades about 0.01 of its potential returns per unit of risk. Turcas Petrol AS is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,336  in Turcas Petrol AS on September 22, 2024 and sell it today you would earn a total of  304.00  from holding Turcas Petrol AS or generate 13.01% 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.  Turcas Petrol AS

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.

Turcas Petrol AS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Turcas Petrol AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turcas Petrol may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petkim Petrokimya and Turcas Petrol

The main advantage of trading using opposite Petkim Petrokimya and Turcas Petrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petkim Petrokimya 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 Petkim Petrokimya Holding 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.