Correlation Between PIE Industrial and Petronas Gas
Can any of the company-specific risk be diversified away by investing in both PIE Industrial and Petronas Gas 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 PIE Industrial and Petronas Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and Petronas Gas Bhd, you can compare the effects of market volatilities on PIE Industrial and Petronas Gas 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 PIE Industrial with a short position of Petronas Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and Petronas Gas.
Diversification Opportunities for PIE Industrial and Petronas Gas
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PIE and Petronas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Petronas Gas Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronas Gas Bhd and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Petronas Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronas Gas Bhd has no effect on the direction of PIE Industrial i.e., PIE Industrial and Petronas Gas go up and down completely randomly.
Pair Corralation between PIE Industrial and Petronas Gas
Assuming the 90 days trading horizon PIE Industrial Bhd is expected to under-perform the Petronas Gas. In addition to that, PIE Industrial is 3.22 times more volatile than Petronas Gas Bhd. It trades about -0.51 of its total potential returns per unit of risk. Petronas Gas Bhd is currently generating about -0.17 per unit of volatility. If you would invest 1,768 in Petronas Gas Bhd on November 4, 2024 and sell it today you would lose (48.00) from holding Petronas Gas Bhd or give up 2.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIE Industrial Bhd vs. Petronas Gas Bhd
Performance |
| Timeline |
| PIE Industrial Bhd |
| Petronas Gas Bhd |
PIE Industrial and Petronas Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIE Industrial and Petronas Gas
The main advantage of trading using opposite PIE Industrial and Petronas Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial position performs unexpectedly, Petronas Gas 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 Gas will offset losses from the drop in Petronas Gas' long position.| PIE Industrial vs. Kobay Tech Bhd | PIE Industrial vs. Systech Bhd | PIE Industrial vs. Radiant Globaltech Bhd | PIE Industrial vs. Pantech Group Holdings |
| Petronas Gas vs. Eversafe Rubber Bhd | Petronas Gas vs. EA Technique M | Petronas Gas vs. Radiant Globaltech Bhd | Petronas Gas vs. YX Precious Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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