Correlation Between Petronas Chemicals and LPI Capital
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and LPI Capital 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 LPI Capital 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 LPI Capital Bhd, you can compare the effects of market volatilities on Petronas Chemicals and LPI Capital 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 LPI Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and LPI Capital.
Diversification Opportunities for Petronas Chemicals and LPI Capital
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Petronas and LPI is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and LPI Capital Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPI Capital 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 LPI Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPI Capital Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and LPI Capital go up and down completely randomly.
Pair Corralation between Petronas Chemicals and LPI Capital
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the LPI Capital. In addition to that, Petronas Chemicals is 2.46 times more volatile than LPI Capital Bhd. It trades about -0.06 of its total potential returns per unit of risk. LPI Capital Bhd is currently generating about 0.05 per unit of volatility. If you would invest 1,135 in LPI Capital Bhd on August 28, 2024 and sell it today you would earn a total of 187.00 from holding LPI Capital Bhd or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Petronas Chemicals Group vs. LPI Capital Bhd
Performance |
| Timeline |
| Petronas Chemicals |
| LPI Capital Bhd |
Petronas Chemicals and LPI Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and LPI Capital
The main advantage of trading using opposite Petronas Chemicals and LPI Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, LPI Capital 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 LPI Capital will offset losses from the drop in LPI Capital's long position.| Petronas Chemicals vs. Malayan Banking Bhd | Petronas Chemicals vs. Star Media Group | Petronas Chemicals vs. Press Metal Bhd | Petronas Chemicals vs. CSC Steel Holdings |
| LPI Capital vs. Malayan Banking Bhd | LPI Capital vs. Public Bank Bhd | LPI Capital vs. Petronas Chemicals Group | LPI Capital 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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