Correlation Between Public Bank and Petronas Gas
Can any of the company-specific risk be diversified away by investing in both Public Bank and Petronas Gas 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 Public Bank and Petronas Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Bank Bhd and Petronas Gas Bhd, you can compare the effects of market volatilities on Public Bank and Petronas Gas 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 Public Bank with a short position of Petronas Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and Petronas Gas.
Diversification Opportunities for Public Bank and Petronas Gas
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Public and Petronas is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and Petronas Gas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Gas Bhd and Public Bank 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 Public Bank Bhd are associated (or correlated) with Petronas Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Gas Bhd has no effect on the direction of Public Bank i.e., Public Bank and Petronas Gas go up and down completely randomly.
Pair Corralation between Public Bank and Petronas Gas
Assuming the 90 days trading horizon Public Bank Bhd is expected to generate 1.18 times more return on investment than Petronas Gas. However, Public Bank is 1.18 times more volatile than Petronas Gas Bhd. It trades about -0.19 of its potential returns per unit of risk. Petronas Gas Bhd is currently generating about -0.27 per unit of risk. If you would invest 454.00 in Public Bank Bhd on November 2, 2024 and sell it today you would lose (17.00) from holding Public Bank Bhd or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Public Bank Bhd vs. Petronas Gas Bhd
Performance |
| Timeline |
| Public Bank Bhd |
| Petronas Gas Bhd |
Public Bank and Petronas Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Bank and Petronas Gas
The main advantage of trading using opposite Public Bank and Petronas Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Bank position performs unexpectedly, Petronas Gas 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 Gas will offset losses from the drop in Petronas Gas' long position.| Public Bank vs. Malayan Banking Bhd | Public Bank vs. Hong Leong Bank | Public Bank vs. RHB Bank Bhd | Public Bank vs. Nexgram Holdings Bhd |
| Petronas Gas vs. Nexgram Holdings Bhd | Petronas Gas vs. Techfast Holdings Bhd | Petronas Gas vs. Digistar Bhd | Petronas Gas vs. AirAsia X Bhd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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