Correlation Between Kluang Rubber and Petronas Gas
Can any of the company-specific risk be diversified away by investing in both Kluang Rubber 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 Kluang Rubber and Petronas Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kluang Rubber and Petronas Gas Bhd, you can compare the effects of market volatilities on Kluang Rubber 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 Kluang Rubber with a short position of Petronas Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kluang Rubber and Petronas Gas.
Diversification Opportunities for Kluang Rubber and Petronas Gas
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kluang and Petronas is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Kluang Rubber 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 Kluang Rubber 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 Kluang Rubber 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 Kluang Rubber i.e., Kluang Rubber and Petronas Gas go up and down completely randomly.
Pair Corralation between Kluang Rubber and Petronas Gas
Assuming the 90 days trading horizon Kluang Rubber is expected to generate 0.63 times more return on investment than Petronas Gas. However, Kluang Rubber is 1.6 times less risky than Petronas Gas. It trades about 0.11 of its potential returns per unit of risk. Petronas Gas Bhd is currently generating about -0.17 per unit of risk. If you would invest 559.00 in Kluang Rubber on October 23, 2024 and sell it today you would earn a total of 6.00 from holding Kluang Rubber or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kluang Rubber vs. Petronas Gas Bhd
Performance |
| Timeline |
| Kluang Rubber |
| Petronas Gas Bhd |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Kluang Rubber and Petronas Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kluang Rubber and Petronas Gas
The main advantage of trading using opposite Kluang Rubber and Petronas Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kluang Rubber 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.| Kluang Rubber vs. Kossan Rubber Industries | Kluang Rubber vs. K One Technology Bhd | Kluang Rubber vs. Sports Toto Berhad | Kluang Rubber vs. Rubberex M |
| Petronas Gas vs. Sunway Construction Group | Petronas Gas vs. SSF Home Group | Petronas Gas vs. Southern Steel Bhd | Petronas Gas vs. Oriental Food Industries |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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