Correlation Between Petronas Chemicals and Keck Seng
Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Keck Seng 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 Chemicals and Keck Seng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petronas Chemicals Group and Keck Seng Malaysia, you can compare the effects of market volatilities on Petronas Chemicals and Keck Seng 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 Chemicals with a short position of Keck Seng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Keck Seng.
Diversification Opportunities for Petronas Chemicals and Keck Seng
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petronas and Keck is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Keck Seng Malaysia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keck Seng Malaysia and Petronas Chemicals 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 Chemicals Group are associated (or correlated) with Keck Seng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keck Seng Malaysia has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Keck Seng go up and down completely randomly.
Pair Corralation between Petronas Chemicals and Keck Seng
Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Keck Seng. In addition to that, Petronas Chemicals is 3.16 times more volatile than Keck Seng Malaysia. It trades about -0.13 of its total potential returns per unit of risk. Keck Seng Malaysia is currently generating about -0.09 per unit of volatility. If you would invest 587.00 in Keck Seng Malaysia on September 25, 2024 and sell it today you would lose (23.00) from holding Keck Seng Malaysia or give up 3.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Petronas Chemicals Group vs. Keck Seng Malaysia
Performance |
Timeline |
Petronas Chemicals |
Keck Seng Malaysia |
Petronas Chemicals and Keck Seng Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petronas Chemicals and Keck Seng
The main advantage of trading using opposite Petronas Chemicals and Keck Seng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Keck Seng 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 Keck Seng will offset losses from the drop in Keck Seng's long position.Petronas Chemicals vs. Systech Bhd | Petronas Chemicals vs. Cosmos Technology International | Petronas Chemicals vs. HeiTech Padu Bhd | Petronas Chemicals vs. Greatech Technology 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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