Correlation Between Turkiye Petrol and Petrokent Turizm

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

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

Diversification Opportunities for Turkiye Petrol and Petrokent Turizm

-0.35

Correlation Coefficient

Turkiye Petrol  Petrokent Turizm

Very good diversification

The 3 months correlation between Turkiye and Petrokent is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Petrol Rafinerileri and Petrokent Turizm AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrokent Turizm and Turkiye Petrol 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 Turkiye Petrol Rafinerileri are associated (or correlated) with Petrokent Turizm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrokent Turizm has no effect on the direction of Turkiye Petrol i.e., Turkiye Petrol and Petrokent Turizm go up and down completely randomly.

Pair Corralation between Turkiye Petrol and Petrokent Turizm

Assuming the 90 days trading horizon Turkiye Petrol is expected to generate 4.74 times less return on investment than Petrokent Turizm. But when comparing it to its historical volatility, Turkiye Petrol Rafinerileri is 2.06 times less risky than Petrokent Turizm. It trades about 0.02 of its potential returns per unit of risk. Petrokent Turizm AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  23,790  in Petrokent Turizm AS on September 22, 2024 and sell it today you would earn a total of  510.00  from holding Petrokent Turizm AS or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Turkiye Petrol Rafinerileri  vs.  Petrokent Turizm AS

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.

Petrokent Turizm

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Turkiye Petrol and Petrokent Turizm

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

The idea behind Turkiye Petrol Rafinerileri and Petrokent Turizm 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.