Correlation Between Petrokent Turizm and Luks Kadife

Can any of the company-specific risk be diversified away by investing in both Petrokent Turizm and Luks Kadife 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 Petrokent Turizm and Luks Kadife into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrokent Turizm AS and Luks Kadife Ticaret, you can compare the effects of market volatilities on Petrokent Turizm and Luks Kadife 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 Petrokent Turizm with a short position of Luks Kadife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrokent Turizm and Luks Kadife.

Diversification Opportunities for Petrokent Turizm and Luks Kadife

0.82

Correlation Coefficient

Petrokent Turizm  Luks Kadife

Very poor diversification

The 3 months correlation between Petrokent and Luks is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Petrokent Turizm AS and Luks Kadife Ticaret in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luks Kadife Ticaret and Petrokent Turizm 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 Petrokent Turizm AS are associated (or correlated) with Luks Kadife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luks Kadife Ticaret has no effect on the direction of Petrokent Turizm i.e., Petrokent Turizm and Luks Kadife go up and down completely randomly.

Pair Corralation between Petrokent Turizm and Luks Kadife

Assuming the 90 days trading horizon Petrokent Turizm AS is expected to generate 1.17 times more return on investment than Luks Kadife. However, Petrokent Turizm is 1.17 times more volatile than Luks Kadife Ticaret. It trades about 0.14 of its potential returns per unit of risk. Luks Kadife Ticaret is currently generating about 0.16 per unit of risk. If you would invest  16,290  in Petrokent Turizm AS on January 30, 2024 and sell it today you would earn a total of  19,435  from holding Petrokent Turizm AS or generate 119.31% return on investment over 90 days.

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

Petrokent Turizm AS  vs.  Luks Kadife Ticaret

Petrokent Turizm

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrokent Turizm AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Petrokent Turizm demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Luks Kadife Ticaret

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Luks Kadife Ticaret are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward-looking signals, Luks Kadife demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrokent Turizm and Luks Kadife

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

The idea behind Petrokent Turizm AS and Luks Kadife Ticaret 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.