Correlation Between Petronas Chemicals and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Sime Darby 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 Sime Darby 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 Sime Darby Plantation, you can compare the effects of market volatilities on Petronas Chemicals and Sime Darby 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 Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Sime Darby.
Diversification Opportunities for Petronas Chemicals and Sime Darby
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petronas and Sime is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation 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 Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Sime Darby go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Sime Darby
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Sime Darby. In addition to that, Petronas Chemicals is 1.17 times more volatile than Sime Darby Plantation. It trades about -0.08 of its total potential returns per unit of risk. Sime Darby Plantation is currently generating about 0.03 per unit of volatility. If you would invest 444.00 in Sime Darby Plantation on November 7, 2024 and sell it today you would earn a total of 47.00 from holding Sime Darby Plantation or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Sime Darby Plantation
Performance |
| Timeline |
| Petronas Chemicals |
| Sime Darby Plantation |
Petronas Chemicals and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Sime Darby
The main advantage of trading using opposite Petronas Chemicals and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.| Petronas Chemicals vs. Systech Bhd | Petronas Chemicals vs. Tex Cycle Technology | Petronas Chemicals vs. Eversafe Rubber Bhd | Petronas Chemicals vs. ONETECH SOLUTIONS HOLDINGS |
| Sime Darby vs. Nova Wellness Group | Sime Darby vs. British American Tobacco | Sime Darby vs. Melewar Industrial Group | Sime Darby vs. YTL Hospitality REIT |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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