Correlation Between Turcas Petrol and Kardemir Karabuk

Can any of the company-specific risk be diversified away by investing in both Turcas Petrol and Kardemir Karabuk 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 Turcas Petrol and Kardemir Karabuk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Turcas Petrol AS and Kardemir Karabuk Demir, you can compare the effects of market volatilities on Turcas Petrol and Kardemir Karabuk 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 Turcas Petrol with a short position of Kardemir Karabuk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turcas Petrol and Kardemir Karabuk.

Diversification Opportunities for Turcas Petrol and Kardemir Karabuk

0.69

Correlation Coefficient

Turcas Petrol  Kardemir Karabuk

Poor diversification

The 3 months correlation between Turcas and Kardemir is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Turcas Petrol AS and Kardemir Karabuk Demir in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kardemir Karabuk Demir and Turcas Petrol 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 Turcas Petrol AS are associated (or correlated) with Kardemir Karabuk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kardemir Karabuk Demir has no effect on the direction of Turcas Petrol i.e., Turcas Petrol and Kardemir Karabuk go up and down completely randomly.

Pair Corralation between Turcas Petrol and Kardemir Karabuk

Assuming the 90 days trading horizon Turcas Petrol is expected to generate 5.59 times less return on investment than Kardemir Karabuk. But when comparing it to its historical volatility, Turcas Petrol AS is 1.29 times less risky than Kardemir Karabuk. It trades about 0.06 of its potential returns per unit of risk. Kardemir Karabuk Demir is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  1,803  in Kardemir Karabuk Demir on September 23, 2024 and sell it today you would earn a total of  1,037  from holding Kardemir Karabuk Demir or generate 57.52% return on investment over 90 days.

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

Turcas Petrol AS  vs.  Kardemir Karabuk Demir

Turcas Petrol AS

Risk-Adjusted Performance

4 of 100

Insignificant

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

Kardemir Karabuk Demir

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kardemir Karabuk Demir are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Kardemir Karabuk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turcas Petrol and Kardemir Karabuk

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

The idea behind Turcas Petrol AS and Kardemir Karabuk Demir 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.