Correlation Between Petkim Petrokimya and Alarko Holding

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

Diversification Opportunities for Petkim Petrokimya and Alarko Holding

-0.19

Correlation Coefficient

Petkim Petrokimya  Alarko Holding

Good diversification

The 3 months correlation between Petkim and Alarko is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding and Alarko Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarko Holding 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 Alarko Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alarko Holding AS has no effect on the direction of Petkim Petrokimya i.e., Petkim Petrokimya and Alarko Holding go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and Alarko Holding

Assuming the 90 days trading horizon Petkim Petrokimya Holding is expected to under-perform the Alarko Holding. In addition to that, Petkim Petrokimya is 1.05 times more volatile than Alarko Holding AS. It trades about -0.04 of its total potential returns per unit of risk. Alarko Holding AS is currently generating about -0.03 per unit of volatility. If you would invest  11,774  in Alarko Holding AS on October 7, 2024 and sell it today you would lose (2,079) from holding Alarko Holding AS or give up 17.66% of portfolio value over 90 days.

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

Petkim Petrokimya Holding  vs.  Alarko Holding 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 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.

Alarko Holding AS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alarko Holding AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain forward indicators, Alarko Holding demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petkim Petrokimya and Alarko Holding

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

The idea behind Petkim Petrokimya Holding and Alarko Holding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .