Correlation Between Turkiye Petrol and Eregli Demir

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

Diversification Opportunities for Turkiye Petrol and Eregli Demir

0.74

Correlation Coefficient

Turkiye Petrol  Eregli Demir

Poor diversification

The 3 months correlation between Turkiye and Eregli is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Petrol Rafinerileri and Eregli Demir ve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eregli Demir ve 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 Eregli Demir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eregli Demir ve has no effect on the direction of Turkiye Petrol i.e., Turkiye Petrol and Eregli Demir go up and down completely randomly.

Pair Corralation between Turkiye Petrol and Eregli Demir

Assuming the 90 days trading horizon Turkiye Petrol Rafinerileri is expected to under-perform the Eregli Demir. But the stock apears to be less risky and, when comparing its historical volatility, Turkiye Petrol Rafinerileri is 1.33 times less risky than Eregli Demir. The stock trades about -0.08 of its potential returns per unit of risk. The Eregli Demir ve is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,477  in Eregli Demir ve on November 19, 2024 and sell it today you would lose (143.00) from holding Eregli Demir ve or give up 5.77% of portfolio value over 90 days.

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

Turkiye Petrol Rafinerileri  vs.  Eregli Demir ve

Turkiye Petrol Rafin

Risk-Adjusted Performance

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.

Eregli Demir ve

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Turkiye Petrol and Eregli Demir

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

The idea behind Turkiye Petrol Rafinerileri and Eregli Demir ve 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.