Correlation Between Petkim Petrokimya and Koc Holding

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

Diversification Opportunities for Petkim Petrokimya and Koc Holding

0.92

Correlation Coefficient

Petkim Petrokimya  Koc Holding

Almost no diversification

The 3 months correlation between Petkim and Koc is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding and Koc Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koc 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 Koc Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koc Holding AS has no effect on the direction of Petkim Petrokimya i.e., Petkim Petrokimya and Koc Holding go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and Koc Holding

Assuming the 90 days trading horizon Petkim Petrokimya is expected to generate 2.67 times less return on investment than Koc Holding. But when comparing it to its historical volatility, Petkim Petrokimya Holding is 1.37 times less risky than Koc Holding. It trades about 0.07 of its potential returns per unit of risk. Koc Holding AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  15,010  in Koc Holding AS on December 27, 2024 and sell it today you would earn a total of  1,540  from holding Koc Holding AS or generate 10.26% return on investment over 90 days.

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

Petkim Petrokimya Holding  vs.  Koc Holding 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.

Koc Holding AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Koc Holding AS 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.

Pair Trading with Petkim Petrokimya and Koc Holding

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

The idea behind Petkim Petrokimya Holding and Koc 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 Transaction History module to view history of all your transactions and understand their impact on performance.