Correlation Between Petronas Chemicals and BP Plastics
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and BP Plastics 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 BP Plastics 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 BP Plastics Holding, you can compare the effects of market volatilities on Petronas Chemicals and BP Plastics 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 BP Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and BP Plastics.
Diversification Opportunities for Petronas Chemicals and BP Plastics
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petronas and 5100 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and BP Plastics Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP Plastics Holding 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 BP Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP Plastics Holding has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and BP Plastics go up and down completely randomly.
Pair Corralation between Petronas Chemicals and BP Plastics
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the BP Plastics. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Chemicals Group is 1.18 times less risky than BP Plastics. The stock trades about -0.06 of its potential returns per unit of risk. The BP Plastics Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 120.00 in BP Plastics Holding on August 28, 2024 and sell it today you would earn a total of 2.00 from holding BP Plastics Holding or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.17% |
| Values | Daily Returns |
Petronas Chemicals Group vs. BP Plastics Holding
Performance |
| Timeline |
| Petronas Chemicals |
| BP Plastics Holding |
Petronas Chemicals and BP Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and BP Plastics
The main advantage of trading using opposite Petronas Chemicals and BP Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, BP Plastics 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 BP Plastics will offset losses from the drop in BP Plastics' long position.| Petronas Chemicals vs. Malayan Banking Bhd | Petronas Chemicals vs. Star Media Group | Petronas Chemicals vs. Press Metal Bhd | Petronas Chemicals vs. CSC Steel Holdings |
| BP Plastics vs. Aurelius Technologies Bhd | BP Plastics vs. FARM FRESH BERHAD | BP Plastics vs. Nova Wellness Group | BP Plastics vs. Magni Tech 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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