Correlation Between Turkiye Petrol and Tofas Turk

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

Diversification Opportunities for Turkiye Petrol and Tofas Turk

0.84

Correlation Coefficient

Turkiye Petrol  Tofas Turk

Very poor diversification

The 3 months correlation between Turkiye and Tofas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Turkiye Petrol Rafinerileri and Tofas Turk Otomobil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tofas Turk Otomobil 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 Tofas Turk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tofas Turk Otomobil has no effect on the direction of Turkiye Petrol i.e., Turkiye Petrol and Tofas Turk go up and down completely randomly.

Pair Corralation between Turkiye Petrol and Tofas Turk

Assuming the 90 days trading horizon Turkiye Petrol Rafinerileri is expected to generate 1.02 times more return on investment than Tofas Turk. However, Turkiye Petrol is 1.02 times more volatile than Tofas Turk Otomobil. It trades about 0.19 of its potential returns per unit of risk. Tofas Turk Otomobil is currently generating about 0.09 per unit of risk. If you would invest  6,123  in Turkiye Petrol Rafinerileri on February 21, 2024 and sell it today you would earn a total of  13,067  from holding Turkiye Petrol Rafinerileri or generate 213.41% return on investment over 90 days.

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

Turkiye Petrol Rafinerileri  vs.  Tofas Turk Otomobil

Turkiye Petrol Rafin

Risk-Adjusted Performance

14 of 100

Insignificant

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

Tofas Turk Otomobil

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tofas Turk Otomobil are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Tofas Turk demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Turkiye Petrol and Tofas Turk

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

The idea behind Turkiye Petrol Rafinerileri and Tofas Turk Otomobil 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.

Check out your portfolio center.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..