Correlation Between Petronas Chemicals and Malpac Holdings

Can any of the company-specific risk be diversified away by investing in both Petronas Chemicals and Malpac Holdings 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 Malpac Holdings 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 Malpac Holdings Bhd, you can compare the effects of market volatilities on Petronas Chemicals and Malpac Holdings 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 Malpac Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petronas Chemicals and Malpac Holdings.

Diversification Opportunities for Petronas Chemicals and Malpac Holdings

-0.63

Correlation Coefficient

Petronas Chemicals  Malpac Holdings

Excellent diversification

The 3 months correlation between Petronas and Malpac is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Malpac Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malpac Holdings Bhd 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 Malpac Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malpac Holdings Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Malpac Holdings go up and down completely randomly.

Pair Corralation between Petronas Chemicals and Malpac Holdings

Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Malpac Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Chemicals Group is 2.19 times less risky than Malpac Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The Malpac Holdings Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  87.00  in Malpac Holdings Bhd on September 24, 2024 and sell it today you would lose (2.00) from holding Malpac Holdings Bhd or give up 2.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Petronas Chemicals Group  vs.  Malpac Holdings Bhd

Petronas Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petronas Chemicals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Malpac Holdings Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Malpac Holdings Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Malpac Holdings 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 Petronas Chemicals and Malpac Holdings

The main advantage of trading using opposite Petronas Chemicals and Malpac Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petronas Chemicals position performs unexpectedly, Malpac Holdings 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 Malpac Holdings will offset losses from the drop in Malpac Holdings' long position.

The idea behind Petronas Chemicals Group and Malpac Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.