Correlation Between Petkim Petrokimya and Tofas Turk

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

Diversification Opportunities for Petkim Petrokimya and Tofas Turk

0.09

Correlation Coefficient

Petkim Petrokimya  Tofas Turk

Significant diversification

The 3 months correlation between Petkim and Tofas is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Petkim Petrokimya Holding and Tofas Turk Otomobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tofas Turk Otomobil 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 Tofas Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tofas Turk Otomobil has no effect on the direction of Petkim Petrokimya i.e., Petkim Petrokimya and Tofas Turk go up and down completely randomly.

Pair Corralation between Petkim Petrokimya and Tofas Turk

Assuming the 90 days trading horizon Petkim Petrokimya Holding is expected to under-perform the Tofas Turk. But the stock apears to be less risky and, when comparing its historical volatility, Petkim Petrokimya Holding is 1.03 times less risky than Tofas Turk. The stock trades about -0.04 of its potential returns per unit of risk. The Tofas Turk Otomobil is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  24,665  in Tofas Turk Otomobil on October 7, 2024 and sell it today you would lose (3,725) from holding Tofas Turk Otomobil or give up 15.1% of portfolio value over 90 days.

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

Petkim Petrokimya Holding  vs.  Tofas Turk Otomobil

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.

Tofas Turk Otomobil

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tofas Turk Otomobil are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Tofas Turk may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Petkim Petrokimya and Tofas Turk

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

The idea behind Petkim Petrokimya Holding and Tofas Turk Otomobil 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.