Correlation Between Petkim Petrokimya and Ipek Dogal

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

Diversification Opportunities for Petkim Petrokimya and Ipek Dogal

0.11

Correlation Coefficient

Petkim Petrokimya  Ipek Dogal

Average diversification

The 3 months correlation between Petkim and Ipek is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding and Ipek Dogal Enerji in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipek Dogal Enerji 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 Ipek Dogal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipek Dogal Enerji has no effect on the direction of Petkim Petrokimya i.e., Petkim Petrokimya and Ipek Dogal go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and Ipek Dogal

Assuming the 90 days trading horizon Petkim Petrokimya Holding is expected to under-perform the Ipek Dogal. But the stock apears to be less risky and, when comparing its historical volatility, Petkim Petrokimya Holding is 1.37 times less risky than Ipek Dogal. The stock trades about -0.01 of its potential returns per unit of risk. The Ipek Dogal Enerji is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,804  in Ipek Dogal Enerji on September 13, 2024 and sell it today you would earn a total of  2,081  from holding Ipek Dogal Enerji or generate 54.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.31%
Values	Daily Returns

Petkim Petrokimya Holding  vs.  Ipek Dogal Enerji

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.

Ipek Dogal Enerji

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ipek Dogal Enerji are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ipek Dogal demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petkim Petrokimya and Ipek Dogal

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

The idea behind Petkim Petrokimya Holding and Ipek Dogal Enerji 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.