Correlation Between Petronas Gas and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Petronas Gas and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Petronas Gas and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Gas and Dow Jones.
Diversification Opportunities for Petronas Gas and Dow Jones
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Petronas and Dow is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Gas Bhd and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Petronas Gas i.e., Petronas Gas and Dow Jones go up and down completely randomly.
Pair Corralation between Petronas Gas and Dow Jones
Assuming the 90 days trading horizon Petronas Gas is expected to generate 2.28 times less return on investment than Dow Jones. But when comparing it to its historical volatility, Petronas Gas Bhd is 1.98 times less risky than Dow Jones. It trades about 0.23 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Petronas Gas Bhd vs. Dow Jones Industrial
Performance |
| Timeline |
Petronas Gas and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Petronas Gas Bhd
Pair trading matchups for Petronas Gas
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Petronas Gas and Dow Jones
The main advantage of trading using opposite Petronas Gas and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Gas position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Petronas Gas vs. Lysaght Galvanized Steel | Petronas Gas vs. HeiTech Padu Bhd | Petronas Gas vs. Digistar Bhd | Petronas Gas vs. Swift Haulage Bhd |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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