Correlation Between Turcas Petrol and Petkim Petrokimya

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

Diversification Opportunities for Turcas Petrol and Petkim Petrokimya

0.1

Correlation Coefficient

Turcas Petrol  Petkim Petrokimya

Average diversification

The 3 months correlation between Turcas and Petkim is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Turcas Petrol AS and Petkim Petrokimya Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petkim Petrokimya Holding 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 Petkim Petrokimya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petkim Petrokimya Holding has no effect on the direction of Turcas Petrol i.e., Turcas Petrol and Petkim Petrokimya go up and down completely randomly.

Pair Corralation between Turcas Petrol and Petkim Petrokimya

Assuming the 90 days trading horizon Turcas Petrol AS is expected to generate 1.37 times more return on investment than Petkim Petrokimya. However, Turcas Petrol is 1.37 times more volatile than Petkim Petrokimya Holding. It trades about 0.23 of its potential returns per unit of risk. Petkim Petrokimya Holding is currently generating about 0.04 per unit of risk. If you would invest  2,132  in Turcas Petrol AS on October 6, 2024 and sell it today you would earn a total of  544.00  from holding Turcas Petrol AS or generate 25.52% return on investment over 90 days.

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

Turcas Petrol AS  vs.  Petkim Petrokimya Holding

Turcas Petrol AS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turcas Petrol AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Turcas Petrol demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Turcas Petrol and Petkim Petrokimya

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

The idea behind Turcas Petrol AS and Petkim Petrokimya Holding 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.