Correlation Between Petronas Chemicals and OSK Holdings

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

Diversification Opportunities for Petronas Chemicals and OSK Holdings

-0.27

Correlation Coefficient

Petronas Chemicals  OSK Holdings

Very good diversification

The 3 months correlation between Petronas and OSK is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and OSK Holdings Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSK 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 OSK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSK Holdings Bhd has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and OSK Holdings go up and down completely randomly.

Pair Corralation between Petronas Chemicals and OSK Holdings

Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the OSK Holdings. In addition to that, Petronas Chemicals is 1.14 times more volatile than OSK Holdings Bhd. It trades about -0.07 of its total potential returns per unit of risk. OSK Holdings Bhd is currently generating about 0.07 per unit of volatility. If you would invest  138.00  in OSK Holdings Bhd on October 9, 2024 and sell it today you would earn a total of  38.00  from holding OSK Holdings Bhd or generate 27.54% return on investment over 90 days.

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

Petronas Chemicals Group  vs.  OSK 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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

OSK Holdings Bhd

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OSK Holdings Bhd are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, OSK Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petronas Chemicals and OSK Holdings

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

The idea behind Petronas Chemicals Group and OSK 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 CEOs Directory module to screen CEOs from public companies around the world.