Correlation Between Bayrak EBT and Turcas Petrol

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

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

Diversification Opportunities for Bayrak EBT and Turcas Petrol

-0.08

Correlation Coefficient

Bayrak EBT  Turcas Petrol

Good diversification

The 3 months correlation between Bayrak and Turcas is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bayrak EBT Taban 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 Bayrak EBT 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 Bayrak EBT Taban 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 Bayrak EBT i.e., Bayrak EBT and Turcas Petrol go up and down completely randomly.

Pair Corralation between Bayrak EBT and Turcas Petrol

Assuming the 90 days trading horizon Bayrak EBT Taban is expected to generate 1.49 times more return on investment than Turcas Petrol. However, Bayrak EBT is 1.49 times more volatile than Turcas Petrol AS. It trades about 0.32 of its potential returns per unit of risk. Turcas Petrol AS is currently generating about 0.07 per unit of risk. If you would invest  5,505  in Bayrak EBT Taban on February 21, 2024 and sell it today you would earn a total of  1,495  from holding Bayrak EBT Taban or generate 27.16% return on investment over 90 days.

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

Bayrak EBT Taban  vs.  Turcas Petrol AS

Bayrak EBT Taban

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bayrak EBT Taban are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward-looking signals, Bayrak EBT demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 basic indicators, Turcas Petrol may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Bayrak EBT and Turcas Petrol

The main advantage of trading using opposite Bayrak EBT and Turcas Petrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayrak EBT 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 Bayrak EBT Taban 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.