Correlation Between Hengyuan Refining and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Hengyuan Refining 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 Hengyuan Refining and Petronas Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hengyuan Refining and Petronas Chemicals Group, you can compare the effects of market volatilities on Hengyuan Refining 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 Hengyuan Refining with a short position of Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengyuan Refining and Petronas Chemicals.
Diversification Opportunities for Hengyuan Refining and Petronas Chemicals
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hengyuan and Petronas is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hengyuan Refining and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals and Hengyuan Refining 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 Hengyuan Refining 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 Hengyuan Refining i.e., Hengyuan Refining and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Hengyuan Refining and Petronas Chemicals
Assuming the 90 days trading horizon Hengyuan Refining is expected to under-perform the Petronas Chemicals. In addition to that, Hengyuan Refining is 1.46 times more volatile than Petronas Chemicals Group. It trades about -0.04 of its total potential returns per unit of risk. Petronas Chemicals Group is currently generating about -0.05 per unit of volatility. If you would invest 642.00 in Petronas Chemicals Group on September 2, 2024 and sell it today you would lose (176.00) from holding Petronas Chemicals Group or give up 27.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengyuan Refining vs. Petronas Chemicals Group
Performance |
| Timeline |
| Hengyuan Refining |
| Petronas Chemicals |
Hengyuan Refining and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengyuan Refining and Petronas Chemicals
The main advantage of trading using opposite Hengyuan Refining and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengyuan Refining 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.| Hengyuan Refining vs. Senheng New Retail | Hengyuan Refining vs. Binasat Communications Bhd | Hengyuan Refining vs. Farm Price Holdings | Hengyuan Refining vs. SSF Home Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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