Correlation Between Turkiye Petrol and Dogus Otomotiv

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

By analyzing existing cross correlation between Turkiye Petrol Rafinerileri and Dogus Otomotiv Servis, you can compare the effects of market volatilities on Turkiye Petrol and Dogus Otomotiv 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 Turkiye Petrol with a short position of Dogus Otomotiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Turkiye Petrol and Dogus Otomotiv.

Diversification Opportunities for Turkiye Petrol and Dogus Otomotiv

0.7

Correlation Coefficient

Turkiye Petrol  Dogus Otomotiv

Poor diversification

The 3 months correlation between Turkiye and Dogus is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Petrol Rafinerileri and Dogus Otomotiv Servis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dogus Otomotiv Servis and Turkiye 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 Turkiye Petrol Rafinerileri are associated (or correlated) with Dogus Otomotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dogus Otomotiv Servis has no effect on the direction of Turkiye Petrol i.e., Turkiye Petrol and Dogus Otomotiv go up and down completely randomly.

Pair Corralation between Turkiye Petrol and Dogus Otomotiv

Assuming the 90 days trading horizon Turkiye Petrol is expected to generate 2.56 times less return on investment than Dogus Otomotiv. But when comparing it to its historical volatility, Turkiye Petrol Rafinerileri is 1.5 times less risky than Dogus Otomotiv. It trades about 0.12 of its potential returns per unit of risk. Dogus Otomotiv Servis is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  20,610  in Dogus Otomotiv Servis on September 4, 2024 and sell it today you would earn a total of  1,790  from holding Dogus Otomotiv Servis or generate 8.69% return on investment over 90 days.

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

Turkiye Petrol Rafinerileri  vs.  Dogus Otomotiv Servis

Turkiye Petrol Rafin

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Turkiye Petrol Rafinerileri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Turkiye Petrol is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Dogus Otomotiv Servis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dogus Otomotiv Servis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dogus Otomotiv is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Turkiye Petrol and Dogus Otomotiv

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

The idea behind Turkiye Petrol Rafinerileri and Dogus Otomotiv Servis 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.