Correlation Between Petronas Chemicals and RCE Capital
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and RCE 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 RCE 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 RCE Capital Berhad, you can compare the effects of market volatilities on Petronas Chemicals and RCE 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 RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and RCE Capital.
Diversification Opportunities for Petronas Chemicals and RCE Capital
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Petronas and RCE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and RCE Capital Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCE Capital 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 RCE Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCE Capital Berhad has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and RCE Capital go up and down completely randomly.
Pair Corralation between Petronas Chemicals and RCE Capital
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to generate 2.58 times more return on investment than RCE Capital. However, Petronas Chemicals is 2.58 times more volatile than RCE Capital Berhad. It trades about 0.01 of its potential returns per unit of risk. RCE Capital Berhad is currently generating about -0.24 per unit of risk. If you would invest 470.00 in Petronas Chemicals Group on October 23, 2024 and sell it today you would lose (1.00) from holding Petronas Chemicals Group or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Chemicals Group vs. RCE Capital Berhad
Performance |
| Timeline |
| Petronas Chemicals |
| RCE Capital Berhad |
Petronas Chemicals and RCE Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Chemicals and RCE Capital
The main advantage of trading using opposite Petronas Chemicals and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, RCE 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 RCE Capital will offset losses from the drop in RCE Capital's long position.| Petronas Chemicals vs. YX Precious Metals | Petronas Chemicals vs. Homeritz Bhd | Petronas Chemicals vs. Leader Steel Holdings | Petronas Chemicals vs. British American Tobacco |
| RCE Capital vs. Star Media Group | RCE Capital vs. Ho Hup Construction | RCE Capital vs. Apollo Food Holdings | RCE Capital vs. Southern Steel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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