Correlation Between Petronas Chemicals and PIE Industrial
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and PIE Industrial 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 PIE Industrial 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 PIE Industrial Bhd, you can compare the effects of market volatilities on Petronas Chemicals and PIE Industrial 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 PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and PIE Industrial.
Diversification Opportunities for Petronas Chemicals and PIE Industrial
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petronas and PIE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and PIE Industrial go up and down completely randomly.
Pair Corralation between Petronas Chemicals and PIE Industrial
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the PIE Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Chemicals Group is 1.04 times less risky than PIE Industrial. The stock trades about -0.08 of its potential returns per unit of risk. The PIE Industrial Bhd is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 540.00 in PIE Industrial Bhd on November 2, 2024 and sell it today you would lose (83.00) from holding PIE Industrial Bhd or give up 15.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. PIE Industrial Bhd
Performance |
| Timeline |
| Petronas Chemicals |
| PIE Industrial Bhd |
Petronas Chemicals and PIE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and PIE Industrial
The main advantage of trading using opposite Petronas Chemicals and PIE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, PIE Industrial 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 PIE Industrial will offset losses from the drop in PIE Industrial's long position.| Petronas Chemicals vs. Diversified Gateway Solutions | Petronas Chemicals vs. Dataprep Holdings Bhd | Petronas Chemicals vs. IHH Healthcare Bhd | Petronas Chemicals vs. Kluang Rubber |
| PIE Industrial vs. Senheng New Retail | PIE Industrial vs. ES Ceramics Technology | PIE Industrial vs. Choo Bee Metal | PIE Industrial vs. Central Industrial Corp |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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