Correlation Between Petronas Chemicals and Al Aqar
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Al Aqar 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 Al Aqar 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 Al Aqar Healthcare, you can compare the effects of market volatilities on Petronas Chemicals and Al Aqar 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 Al Aqar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Al Aqar.
Diversification Opportunities for Petronas Chemicals and Al Aqar
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petronas and 5116 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Al Aqar Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Aqar Healthcare 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 Al Aqar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Aqar Healthcare has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Al Aqar go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Al Aqar
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Al Aqar. In addition to that, Petronas Chemicals is 2.42 times more volatile than Al Aqar Healthcare. It trades about -0.24 of its total potential returns per unit of risk. Al Aqar Healthcare is currently generating about -0.03 per unit of volatility. If you would invest 141.00 in Al Aqar Healthcare on September 2, 2024 and sell it today you would lose (1.00) from holding Al Aqar Healthcare or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Al Aqar Healthcare
Performance |
| Timeline |
| Petronas Chemicals |
| Al Aqar Healthcare |
Petronas Chemicals and Al Aqar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Al Aqar
The main advantage of trading using opposite Petronas Chemicals and Al Aqar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Al Aqar 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 Al Aqar will offset losses from the drop in Al Aqar's long position.The idea behind Petronas Chemicals Group and Al Aqar Healthcare pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Al Aqar vs. YTL Hospitality REIT | Al Aqar vs. Digistar Bhd | Al Aqar vs. Minetech Resources Bhd | Al Aqar vs. Swift Haulage 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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