Correlation Between Jacobs Solutions and PETRONAS Gas

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

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

Diversification Opportunities for Jacobs Solutions and PETRONAS Gas

-0.03

Correlation Coefficient

Jacobs Solutions  PETRONAS Gas

Good diversification

The 3 months correlation between Jacobs and PETRONAS is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions 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 Jacobs Solutions i.e., Jacobs Solutions and PETRONAS Gas go up and down completely randomly.

Pair Corralation between Jacobs Solutions and PETRONAS Gas

Taking into account the 90-day investment horizon Jacobs Solutions is expected to under-perform the PETRONAS Gas. But the stock apears to be less risky and, when comparing its historical volatility, Jacobs Solutions is 2.09 times less risky than PETRONAS Gas. The stock trades about -0.12 of its potential returns per unit of risk. The PETRONAS Gas Berhad is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  392.00  in PETRONAS Gas Berhad on December 20, 2024 and sell it today you would lose (23.00) from holding PETRONAS Gas Berhad or give up 5.87% of portfolio value over 90 days.

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

Jacobs Solutions  vs.  PETRONAS Gas Berhad

Jacobs Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jacobs Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward-looking indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

PETRONAS Gas Berhad

Risk-Adjusted Performance

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Jacobs Solutions and PETRONAS Gas

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

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.