Correlation Between Al Aqar and Petronas Gas

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

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

Diversification Opportunities for Al Aqar and Petronas Gas

-0.78

Correlation Coefficient

Al Aqar  Petronas Gas

Pay attention - limited upside

The 3 months correlation between 5116 and Petronas is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Al Aqar Healthcare 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 Al Aqar 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 Al Aqar Healthcare 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 Al Aqar i.e., Al Aqar and Petronas Gas go up and down completely randomly.

Pair Corralation between Al Aqar and Petronas Gas

Assuming the 90 days trading horizon Al Aqar Healthcare is expected to under-perform the Petronas Gas. In addition to that, Al Aqar is 2.72 times more volatile than Petronas Gas Bhd. It trades about -0.05 of its total potential returns per unit of risk. Petronas Gas Bhd is currently generating about 0.27 per unit of volatility. If you would invest  1,744  in Petronas Gas Bhd on September 4, 2024 and sell it today you would earn a total of  42.00  from holding Petronas Gas Bhd or generate 2.41% return on investment over 90 days.

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

Al Aqar Healthcare  vs.  Petronas Gas Bhd

Al Aqar Healthcare

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Al Aqar Healthcare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Al Aqar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Al Aqar and Petronas Gas

The main advantage of trading using opposite Al Aqar and Petronas Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Al Aqar 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 Al Aqar Healthcare 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..