Correlation Between Malaysia Airport and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Malaysia Airport 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 Malaysia Airport and Petronas Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Malaysia Airport Holdings and Petronas Chemicals Group, you can compare the effects of market volatilities on Malaysia Airport 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 Malaysia Airport with a short position of Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malaysia Airport and Petronas Chemicals.
Diversification Opportunities for Malaysia Airport and Petronas Chemicals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Malaysia and Petronas is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Malaysia Airport Holdings and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals and Malaysia Airport 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 Malaysia Airport Holdings 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 Malaysia Airport i.e., Malaysia Airport and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Malaysia Airport and Petronas Chemicals
Assuming the 90 days trading horizon Malaysia Airport Holdings is expected to generate 0.05 times more return on investment than Petronas Chemicals. However, Malaysia Airport Holdings is 20.51 times less risky than Petronas Chemicals. It trades about -0.05 of its potential returns per unit of risk. Petronas Chemicals Group is currently generating about -0.24 per unit of risk. If you would invest 1,092 in Malaysia Airport Holdings on November 29, 2024 and sell it today you would lose (2.00) from holding Malaysia Airport Holdings or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Malaysia Airport Holdings vs. Petronas Chemicals Group
Performance |
| Timeline |
| Malaysia Airport Holdings |
| Petronas Chemicals |
Malaysia Airport and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Malaysia Airport and Petronas Chemicals
The main advantage of trading using opposite Malaysia Airport and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malaysia Airport 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.| Malaysia Airport vs. MClean Technologies Bhd | Malaysia Airport vs. Advanced Packaging Tech | Malaysia Airport vs. Coraza Integrated Technology | Malaysia Airport vs. FARM FRESH BERHAD |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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