Correlation Between Petronas Chemicals and Sand Nisko

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

Diversification Opportunities for Petronas Chemicals and Sand Nisko

0.6

Correlation Coefficient

Petronas Chemicals  Sand Nisko

Poor diversification

The 3 months correlation between Petronas and Sand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Petronas Chemicals Group and Sand Nisko Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sand Nisko Capital 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 Sand Nisko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sand Nisko Capital has no effect on the direction of Petronas Chemicals i.e., Petronas Chemicals and Sand Nisko go up and down completely randomly.

Pair Corralation between Petronas Chemicals and Sand Nisko

Assuming the 90 days trading horizon Petronas Chemicals Group is expected to under-perform the Sand Nisko. But the stock apears to be less risky and, when comparing its historical volatility, Petronas Chemicals Group is 21.69 times less risky than Sand Nisko. The stock trades about -0.06 of its potential returns per unit of risk. The Sand Nisko Capital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Sand Nisko Capital on September 20, 2024 and sell it today you would lose (28.00) from holding Sand Nisko Capital or give up 73.68% 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.  Sand Nisko Capital

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.

Sand Nisko Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sand Nisko Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sand Nisko disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petronas Chemicals and Sand Nisko

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

The idea behind Petronas Chemicals Group and Sand Nisko Capital 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 Anywhere module to track or share privately all of your investments from the convenience of any device.