Correlation Between Alarko Carrier and Petkim Petrokimya

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

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

Diversification Opportunities for Alarko Carrier and Petkim Petrokimya

0.53

Correlation Coefficient

Alarko Carrier  Petkim Petrokimya

Very weak diversification

The 3 months correlation between Alarko and Petkim is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alarko Carrier Sanayi and Petkim Petrokimya Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petkim Petrokimya Holding and Alarko Carrier 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 Alarko Carrier Sanayi are associated (or correlated) with Petkim Petrokimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petkim Petrokimya Holding has no effect on the direction of Alarko Carrier i.e., Alarko Carrier and Petkim Petrokimya go up and down completely randomly.

Pair Corralation between Alarko Carrier and Petkim Petrokimya

Assuming the 90 days trading horizon Alarko Carrier Sanayi is expected to generate 1.49 times more return on investment than Petkim Petrokimya. However, Alarko Carrier is 1.49 times more volatile than Petkim Petrokimya Holding. It trades about 0.07 of its potential returns per unit of risk. Petkim Petrokimya Holding is currently generating about -0.05 per unit of risk. If you would invest  101,500  in Alarko Carrier Sanayi on December 29, 2024 and sell it today you would earn a total of  12,200  from holding Alarko Carrier Sanayi or generate 12.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Alarko Carrier Sanayi  vs.  Petkim Petrokimya Holding

Alarko Carrier Sanayi

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alarko Carrier Sanayi are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Alarko Carrier demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Petkim Petrokimya Holding

Risk-Adjusted Performance

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 fairly strong forward indicators, Petkim Petrokimya is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Alarko Carrier and Petkim Petrokimya

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

The idea behind Alarko Carrier Sanayi and Petkim Petrokimya Holding 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.