Correlation Between Petronas Chemicals and Homeritz Bhd
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Homeritz Bhd 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 Homeritz Bhd 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 Homeritz Bhd, you can compare the effects of market volatilities on Petronas Chemicals and Homeritz Bhd 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 Homeritz Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Homeritz Bhd.
Diversification Opportunities for Petronas Chemicals and Homeritz Bhd
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petronas and Homeritz is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Homeritz Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeritz 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 Homeritz Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeritz Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Homeritz Bhd go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Homeritz Bhd
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Homeritz Bhd. In addition to that, Petronas Chemicals is 1.04 times more volatile than Homeritz Bhd. It trades about -0.05 of its total potential returns per unit of risk. Homeritz Bhd is currently generating about 0.05 per unit of volatility. If you would invest 45.00 in Homeritz Bhd on September 2, 2024 and sell it today you would earn a total of 12.00 from holding Homeritz Bhd or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.91% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Homeritz Bhd
Performance |
| Timeline |
| Petronas Chemicals |
| Homeritz Bhd |
Petronas Chemicals and Homeritz Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Homeritz Bhd
The main advantage of trading using opposite Petronas Chemicals and Homeritz Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Homeritz Bhd 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 Homeritz Bhd will offset losses from the drop in Homeritz Bhd's long position.The idea behind Petronas Chemicals Group and Homeritz Bhd 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.| Homeritz Bhd vs. Sports Toto Berhad | Homeritz Bhd vs. Senheng New Retail | Homeritz Bhd vs. Mercury Industries Bhd | Homeritz Bhd vs. Press Metal 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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