Correlation Between Petronas Chemicals and Boustead Heavy
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Boustead Heavy 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 Boustead Heavy 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 Boustead Heavy Industries, you can compare the effects of market volatilities on Petronas Chemicals and Boustead Heavy 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 Boustead Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Boustead Heavy.
Diversification Opportunities for Petronas Chemicals and Boustead Heavy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petronas and Boustead is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Boustead Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boustead Heavy Industries 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 Boustead Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boustead Heavy Industries has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Boustead Heavy go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Boustead Heavy
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Boustead Heavy. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Chemicals Group is 5.19 times less risky than Boustead Heavy. The stock trades about -0.27 of its potential returns per unit of risk. The Boustead Heavy Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 45.00 in Boustead Heavy Industries on August 30, 2024 and sell it today you would lose (2.00) from holding Boustead Heavy Industries or give up 4.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. Boustead Heavy Industries
Performance |
| Timeline |
| Petronas Chemicals |
| Boustead Heavy Industries |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Petronas Chemicals and Boustead Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and Boustead Heavy
The main advantage of trading using opposite Petronas Chemicals and Boustead Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Boustead Heavy 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 Boustead Heavy will offset losses from the drop in Boustead Heavy's long position.| Petronas Chemicals vs. Minetech Resources Bhd | Petronas Chemicals vs. Sunzen Biotech Bhd | Petronas Chemicals vs. ViTrox Bhd | Petronas Chemicals vs. Hengyuan Refining |
| Boustead Heavy vs. YX Precious Metals | Boustead Heavy vs. Alliance Financial Group | Boustead Heavy vs. Choo Bee Metal | Boustead Heavy vs. RHB Bank 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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