Correlation Between Petronas Chemicals and Kluang Rubber
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Kluang Rubber 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 Kluang Rubber 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 Kluang Rubber, you can compare the effects of market volatilities on Petronas Chemicals and Kluang Rubber 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 Kluang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Kluang Rubber.
Diversification Opportunities for Petronas Chemicals and Kluang Rubber
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petronas and Kluang is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Kluang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kluang Rubber 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 Kluang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kluang Rubber has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Kluang Rubber go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Kluang Rubber
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Kluang Rubber. In addition to that, Petronas Chemicals is 1.73 times more volatile than Kluang Rubber. It trades about -0.08 of its total potential returns per unit of risk. Kluang Rubber is currently generating about -0.02 per unit of volatility. If you would invest 587.00 in Kluang Rubber on November 2, 2024 and sell it today you would lose (17.00) from holding Kluang Rubber or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.03% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Kluang Rubber
Performance |
| Timeline |
| Petronas Chemicals |
| Kluang Rubber |
Petronas Chemicals and Kluang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Kluang Rubber
The main advantage of trading using opposite Petronas Chemicals and Kluang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Kluang Rubber 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 Kluang Rubber will offset losses from the drop in Kluang Rubber's long position.| Petronas Chemicals vs. Diversified Gateway Solutions | Petronas Chemicals vs. Dataprep Holdings Bhd | Petronas Chemicals vs. IHH Healthcare Bhd | Petronas Chemicals vs. Kluang Rubber |
| Kluang Rubber vs. Farm Price Holdings | Kluang Rubber vs. Globetronics Tech Bhd | Kluang Rubber vs. Cloudpoint Technology Berhad | Kluang Rubber vs. MI Technovation 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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