Correlation Between Star Media and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Star Media and Petronas Chemicals 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 Star Media and Petronas Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Media Group and Petronas Chemicals Group, you can compare the effects of market volatilities on Star Media and Petronas Chemicals 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 Star Media with a short position of Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and Petronas Chemicals.
Diversification Opportunities for Star Media and Petronas Chemicals
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Star and Petronas is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals and Star Media 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 Star Media Group are associated (or correlated) with Petronas Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Chemicals has no effect on the direction of Star Media i.e., Star Media and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Star Media and Petronas Chemicals
Assuming the 90 days trading horizon Star Media Group is expected to generate 1.2 times more return on investment than Petronas Chemicals. However, Star Media is 1.2 times more volatile than Petronas Chemicals Group. It trades about -0.09 of its potential returns per unit of risk. Petronas Chemicals Group is currently generating about -0.25 per unit of risk. If you would invest 41.00 in Star Media Group on November 7, 2024 and sell it today you would lose (1.00) from holding Star Media Group or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Star Media Group vs. Petronas Chemicals Group
Performance |
| Timeline |
| Star Media Group |
| Petronas Chemicals |
Star Media and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Media and Petronas Chemicals
The main advantage of trading using opposite Star Media and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Media position performs unexpectedly, Petronas Chemicals 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 Petronas Chemicals will offset losses from the drop in Petronas Chemicals' long position.| Star Media vs. Media Prima Bhd | Star Media vs. Asia Media Group | Star Media vs. Advance Information Marketing |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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