Correlation Between Axiata Group and Petronas Chemicals
Can any of the company-specific risk be diversified away by investing in both Axiata Group 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 Axiata Group and Petronas Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axiata Group Bhd and Petronas Chemicals Group, you can compare the effects of market volatilities on Axiata Group 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 Axiata Group with a short position of Petronas Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axiata Group and Petronas Chemicals.
Diversification Opportunities for Axiata Group and Petronas Chemicals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Axiata and Petronas is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Axiata Group Bhd and Petronas Chemicals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Chemicals and Axiata Group 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 Axiata Group Bhd 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 Axiata Group i.e., Axiata Group and Petronas Chemicals go up and down completely randomly.
Pair Corralation between Axiata Group and Petronas Chemicals
Assuming the 90 days trading horizon Axiata Group Bhd is expected to generate 1.0 times more return on investment than Petronas Chemicals. However, Axiata Group is 1.0 times more volatile than Petronas Chemicals Group. It trades about -0.01 of its potential returns per unit of risk. Petronas Chemicals Group is currently generating about -0.05 per unit of risk. If you would invest 273.00 in Axiata Group Bhd on September 13, 2024 and sell it today you would lose (36.00) from holding Axiata Group Bhd or give up 13.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axiata Group Bhd vs. Petronas Chemicals Group
Performance |
| Timeline |
| Axiata Group Bhd |
| Petronas Chemicals |
Axiata Group and Petronas Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axiata Group and Petronas Chemicals
The main advantage of trading using opposite Axiata Group and Petronas Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axiata Group 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.| Axiata Group vs. YX Precious Metals | Axiata Group vs. JF Technology BHD | Axiata Group vs. ES Ceramics Technology | Axiata Group vs. Datasonic Group Bhd |
| Petronas Chemicals vs. Lotte Chemical Titan | Petronas Chemicals vs. Ancom Berhad | Petronas Chemicals vs. Techbond Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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