Correlation Between ViTrox Bhd and Petronas Gas

Can any of the company-specific risk be diversified away by investing in both ViTrox Bhd 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 ViTrox Bhd and Petronas Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ViTrox Bhd and Petronas Gas Bhd, you can compare the effects of market volatilities on ViTrox Bhd 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 ViTrox Bhd with a short position of Petronas Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of ViTrox Bhd and Petronas Gas.

Diversification Opportunities for ViTrox Bhd and Petronas Gas

-0.25

Correlation Coefficient

ViTrox Bhd  Petronas Gas

Very good diversification

The 3 months correlation between ViTrox and Petronas is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ViTrox 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 ViTrox Bhd 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 ViTrox 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 ViTrox Bhd i.e., ViTrox Bhd and Petronas Gas go up and down completely randomly.

Pair Corralation between ViTrox Bhd and Petronas Gas

Assuming the 90 days trading horizon ViTrox Bhd is expected to generate 4.61 times more return on investment than Petronas Gas. However, ViTrox Bhd is 4.61 times more volatile than Petronas Gas Bhd. It trades about 0.15 of its potential returns per unit of risk. Petronas Gas Bhd is currently generating about -0.03 per unit of risk. If you would invest  318.00  in ViTrox Bhd on September 25, 2024 and sell it today you would earn a total of  79.00  from holding ViTrox Bhd or generate 24.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ViTrox Bhd  vs.  Petronas Gas Bhd

ViTrox Bhd

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ViTrox Bhd are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, ViTrox Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

Petronas Gas Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petronas Gas Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Petronas Gas is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ViTrox Bhd and Petronas Gas

The main advantage of trading using opposite ViTrox Bhd and Petronas Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ViTrox Bhd 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.

The idea behind ViTrox Bhd and Petronas Gas Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.