Correlation Between Turkiye Petrol and Turcas Petrol

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

Diversification Opportunities for Turkiye Petrol and Turcas Petrol

0.36

Correlation Coefficient

Turkiye Petrol  Turcas Petrol

Weak diversification

The 3 months correlation between Turkiye and Turcas is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Petrol Rafinerileri and Turcas Petrol AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Turcas Petrol AS 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 Turcas Petrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Turcas Petrol AS has no effect on the direction of Turkiye Petrol i.e., Turkiye Petrol and Turcas Petrol go up and down completely randomly.

Pair Corralation between Turkiye Petrol and Turcas Petrol

Assuming the 90 days trading horizon Turkiye Petrol Rafinerileri is expected to under-perform the Turcas Petrol. But the stock apears to be less risky and, when comparing its historical volatility, Turkiye Petrol Rafinerileri is 1.9 times less risky than Turcas Petrol. The stock trades about -0.02 of its potential returns per unit of risk. The Turcas Petrol AS is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  2,230  in Turcas Petrol AS on September 23, 2024 and sell it today you would earn a total of  410.00  from holding Turcas Petrol AS or generate 18.39% return on investment over 90 days.

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

Turkiye Petrol Rafinerileri  vs.  Turcas Petrol AS

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 latest inconsistent performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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.

Pair Trading with Turkiye Petrol and Turcas Petrol

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

The idea behind Turkiye Petrol Rafinerileri and Turcas Petrol AS 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.