Correlation Between Petronas Chemicals and Sunway Bhd
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Sunway 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 Sunway 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 Sunway Bhd, you can compare the effects of market volatilities on Petronas Chemicals and Sunway 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 Sunway Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Sunway Bhd.
Diversification Opportunities for Petronas Chemicals and Sunway Bhd
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petronas and Sunway is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Sunway Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway 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 Sunway Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Sunway Bhd go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Sunway Bhd
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Sunway Bhd. In addition to that, Petronas Chemicals is 3.15 times more volatile than Sunway Bhd. It trades about -0.27 of its total potential returns per unit of risk. Sunway Bhd is currently generating about 0.34 per unit of volatility. If you would invest 425.00 in Sunway Bhd on November 28, 2024 and sell it today you would earn a total of 38.00 from holding Sunway Bhd or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Sunway Bhd
Performance |
| Timeline |
| Petronas Chemicals |
| Sunway Bhd |
Petronas Chemicals and Sunway Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Sunway Bhd
The main advantage of trading using opposite Petronas Chemicals and Sunway Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Sunway 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 Sunway Bhd will offset losses from the drop in Sunway Bhd's long position.| Petronas Chemicals vs. MClean Technologies Bhd | Petronas Chemicals vs. Alliance Financial Group | Petronas Chemicals vs. Central Industrial Corp | Petronas Chemicals vs. ECM Libra Financial |
| Sunway Bhd vs. Rubberex M | Sunway Bhd vs. Sungei Bagan Rubber | Sunway Bhd vs. Mycron Steel Bhd | Sunway Bhd vs. Aeon Credit Service |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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