Correlation Between Petkim Petrokimya and Arcelik AS

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

Diversification Opportunities for Petkim Petrokimya and Arcelik AS

0.57

Correlation Coefficient

Petkim Petrokimya  Arcelik AS

Very weak diversification

The 3 months correlation between Petkim and Arcelik is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding and Arcelik AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcelik 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 Arcelik AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcelik AS has no effect on the direction of Petkim Petrokimya i.e., Petkim Petrokimya and Arcelik AS go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and Arcelik AS

Assuming the 90 days trading horizon Petkim Petrokimya Holding is expected to under-perform the Arcelik AS. But the stock apears to be less risky and, when comparing its historical volatility, Petkim Petrokimya Holding is 1.17 times less risky than Arcelik AS. The stock trades about -0.1 of its potential returns per unit of risk. The Arcelik AS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14,170  in Arcelik AS on December 25, 2024 and sell it today you would lose (50.00) from holding Arcelik AS or give up 0.35% of portfolio value over 90 days.

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

Petkim Petrokimya Holding  vs.  Arcelik AS

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 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.

Arcelik AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcelik AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Arcelik AS is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Petkim Petrokimya and Arcelik AS

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

The idea behind Petkim Petrokimya Holding and Arcelik 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.