Correlation Between Petronas Chemicals and Tomei Consolidated
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Tomei Consolidated 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 Tomei Consolidated 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 Tomei Consolidated Bhd, you can compare the effects of market volatilities on Petronas Chemicals and Tomei Consolidated 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 Tomei Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Tomei Consolidated.
Diversification Opportunities for Petronas Chemicals and Tomei Consolidated
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Petronas and Tomei is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Tomei Consolidated Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomei Consolidated 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 Tomei Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomei Consolidated Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Tomei Consolidated go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Tomei Consolidated
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Tomei Consolidated. In addition to that, Petronas Chemicals is 1.52 times more volatile than Tomei Consolidated Bhd. It trades about -0.27 of its total potential returns per unit of risk. Tomei Consolidated Bhd is currently generating about 0.31 per unit of volatility. If you would invest 152.00 in Tomei Consolidated Bhd on November 28, 2024 and sell it today you would earn a total of 25.00 from holding Tomei Consolidated Bhd or generate 16.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Tomei Consolidated Bhd
Performance |
| Timeline |
| Petronas Chemicals |
| Tomei Consolidated Bhd |
Petronas Chemicals and Tomei Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Tomei Consolidated
The main advantage of trading using opposite Petronas Chemicals and Tomei Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Tomei Consolidated 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 Tomei Consolidated will offset losses from the drop in Tomei Consolidated'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 |
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