Correlation Between Petronas Chemicals and CPE Technology
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and CPE Technology 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 CPE Technology 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 CPE Technology Berhad, you can compare the effects of market volatilities on Petronas Chemicals and CPE Technology 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 CPE Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and CPE Technology.
Diversification Opportunities for Petronas Chemicals and CPE Technology
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petronas and CPE is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and CPE Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPE Technology Berhad 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 CPE Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPE Technology Berhad has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and CPE Technology go up and down completely randomly.
Pair Corralation between Petronas Chemicals and CPE Technology
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the CPE Technology. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Chemicals Group is 1.81 times less risky than CPE Technology. The stock trades about -0.06 of its potential returns per unit of risk. The CPE Technology Berhad is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 91.00 in CPE Technology Berhad on August 28, 2024 and sell it today you would lose (1.00) from holding CPE Technology Berhad or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 49.28% |
| Values | Daily Returns |
Petronas Chemicals Group vs. CPE Technology Berhad
Performance |
| Timeline |
| Petronas Chemicals |
| CPE Technology Berhad |
Petronas Chemicals and CPE Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and CPE Technology
The main advantage of trading using opposite Petronas Chemicals and CPE Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, CPE Technology 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 CPE Technology will offset losses from the drop in CPE Technology's long position.| Petronas Chemicals vs. Digistar Bhd | Petronas Chemicals vs. Minetech Resources Bhd | Petronas Chemicals vs. OpenSys M Bhd | Petronas Chemicals vs. Insas Bhd |
| CPE Technology vs. Malayan Banking Bhd | CPE Technology vs. Public Bank Bhd | CPE Technology vs. Petronas Chemicals Group | CPE Technology vs. Tenaga Nasional 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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