Correlation Between BlackRock and PETRONAS Gas

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

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

Diversification Opportunities for BlackRock and PETRONAS Gas

-0.05

Correlation Coefficient

BlackRock  PETRONAS Gas

Good diversification

The 3 months correlation between BlackRock and PETRONAS is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and PETRONAS Gas Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETRONAS Gas Berhad and BlackRock 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 BlackRock 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 Berhad has no effect on the direction of BlackRock i.e., BlackRock and PETRONAS Gas go up and down completely randomly.

Pair Corralation between BlackRock and PETRONAS Gas

Considering the 90-day investment horizon BlackRock is expected to generate 2.24 times less return on investment than PETRONAS Gas. But when comparing it to its historical volatility, BlackRock is 5.37 times less risky than PETRONAS Gas. It trades about 0.07 of its potential returns per unit of risk. PETRONAS Gas Berhad is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  409.00  in PETRONAS Gas Berhad on October 6, 2024 and sell it today you would lose (21.00) from holding PETRONAS Gas Berhad or give up 5.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.21%
Values	Daily Returns

BlackRock  vs.  PETRONAS Gas Berhad

BlackRock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PETRONAS Gas Berhad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PETRONAS Gas Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PETRONAS Gas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BlackRock and PETRONAS Gas

The main advantage of trading using opposite BlackRock and PETRONAS Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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 BlackRock and PETRONAS Gas Berhad 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.