Correlation Between Petronas Gas and Mesiniaga Bhd
Can any of the company-specific risk be diversified away by investing in both Petronas Gas and Mesiniaga Bhd 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 Gas and Mesiniaga Bhd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petronas Gas Bhd and Mesiniaga Bhd, you can compare the effects of market volatilities on Petronas Gas and Mesiniaga Bhd 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 Gas with a short position of Mesiniaga Bhd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Gas and Mesiniaga Bhd.
Diversification Opportunities for Petronas Gas and Mesiniaga Bhd
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petronas and Mesiniaga is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Gas Bhd and Mesiniaga Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesiniaga Bhd and Petronas Gas 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 Gas Bhd are associated (or correlated) with Mesiniaga Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesiniaga Bhd has no effect on the direction of Petronas Gas i.e., Petronas Gas and Mesiniaga Bhd go up and down completely randomly.
Pair Corralation between Petronas Gas and Mesiniaga Bhd
Assuming the 90 days trading horizon Petronas Gas Bhd is expected to under-perform the Mesiniaga Bhd. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Gas Bhd is 2.55 times less risky than Mesiniaga Bhd. The stock trades about -0.07 of its potential returns per unit of risk. The Mesiniaga Bhd is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Mesiniaga Bhd on October 31, 2024 and sell it today you would lose (7.00) from holding Mesiniaga Bhd or give up 4.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petronas Gas Bhd vs. Mesiniaga Bhd
Performance |
| Timeline |
| Petronas Gas Bhd |
| Mesiniaga Bhd |
Petronas Gas and Mesiniaga Bhd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petronas Gas and Mesiniaga Bhd
The main advantage of trading using opposite Petronas Gas and Mesiniaga Bhd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Gas position performs unexpectedly, Mesiniaga Bhd 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 Mesiniaga Bhd will offset losses from the drop in Mesiniaga Bhd's long position.| Petronas Gas vs. Nexgram Holdings Bhd | Petronas Gas vs. Techfast Holdings Bhd | Petronas Gas vs. Digistar Bhd | Petronas Gas vs. AirAsia X Bhd |
| Mesiniaga Bhd vs. Malayan Banking Bhd | Mesiniaga Bhd vs. Public Bank Bhd | Mesiniaga Bhd vs. Petronas Chemicals Group | Mesiniaga Bhd 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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