Correlation Between Petronas Chemicals and Batu Kawan
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Batu Kawan 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 Petronas Chemicals and Batu Kawan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petronas Chemicals Group and Batu Kawan Bhd, you can compare the effects of market volatilities on Petronas Chemicals and Batu Kawan 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 Petronas Chemicals with a short position of Batu Kawan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Batu Kawan.
Diversification Opportunities for Petronas Chemicals and Batu Kawan
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petronas and Batu is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Batu Kawan Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batu Kawan Bhd and Petronas Chemicals 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 Petronas Chemicals Group are associated (or correlated) with Batu Kawan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batu Kawan Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Batu Kawan go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Batu Kawan
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to generate 4.23 times more return on investment than Batu Kawan. However, Petronas Chemicals is 4.23 times more volatile than Batu Kawan Bhd. It trades about 0.01 of its potential returns per unit of risk. Batu Kawan Bhd is currently generating about -0.02 per unit of risk. If you would invest 470.00 in Petronas Chemicals Group on October 20, 2024 and sell it today you would lose (1.00) from holding Petronas Chemicals Group or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Batu Kawan Bhd
Performance |
| Timeline |
| Petronas Chemicals |
| Batu Kawan Bhd |
Petronas Chemicals and Batu Kawan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Batu Kawan
The main advantage of trading using opposite Petronas Chemicals and Batu Kawan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Batu Kawan 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 Batu Kawan will offset losses from the drop in Batu Kawan's long position.| Petronas Chemicals vs. K One Technology Bhd | Petronas Chemicals vs. Sunway Construction Group | Petronas Chemicals vs. Shangri La Hotels | Petronas Chemicals vs. Cloudpoint Technology Berhad |
| Batu Kawan vs. Cloudpoint Technology Berhad | Batu Kawan vs. Hong Leong Bank | Batu Kawan vs. Carlsberg Brewery Malaysia | Batu Kawan vs. Petronas Chemicals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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