Correlation Between Genetec Technology and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Genetec Technology and Petronas Chemicals 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 Genetec Technology and Petronas Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genetec Technology Bhd and Petronas Chemicals Group, you can compare the effects of market volatilities on Genetec Technology and Petronas Chemicals 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 Genetec Technology with a short position of Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genetec Technology and Petronas Chemicals.
Diversification Opportunities for Genetec Technology and Petronas Chemicals
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genetec and Petronas is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Genetec Technology Bhd and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals and Genetec Technology 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 Genetec Technology Bhd are associated (or correlated) with Petronas Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Chemicals has no effect on the direction of Genetec Technology i.e., Genetec Technology and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Genetec Technology and Petronas Chemicals
Assuming the 90 days trading horizon Genetec Technology Bhd is expected to generate 3.13 times more return on investment than Petronas Chemicals. However, Genetec Technology is 3.13 times more volatile than Petronas Chemicals Group. It trades about 0.25 of its potential returns per unit of risk. Petronas Chemicals Group is currently generating about 0.1 per unit of risk. If you would invest 82.00 in Genetec Technology Bhd on September 18, 2024 and sell it today you would earn a total of 36.00 from holding Genetec Technology Bhd or generate 43.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genetec Technology Bhd vs. Petronas Chemicals Group
Performance |
| Timeline |
| Genetec Technology Bhd |
| Petronas Chemicals |
Genetec Technology and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genetec Technology and Petronas Chemicals
The main advantage of trading using opposite Genetec Technology and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genetec Technology position performs unexpectedly, Petronas Chemicals 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 Petronas Chemicals will offset losses from the drop in Petronas Chemicals' long position.| Genetec Technology vs. Kobay Tech Bhd | Genetec Technology vs. JF Technology BHD | Genetec Technology vs. CB Industrial Product |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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