Correlation Between PETRONAS Gas and Dalata Hotel

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

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

Diversification Opportunities for PETRONAS Gas and Dalata Hotel

0.0

Correlation Coefficient

PETRONAS Gas  Dalata Hotel

Pay attention - limited upside

The 3 months correlation between PETRONAS and Dalata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PETRONAS Gas Berhad and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group and PETRONAS Gas 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 Gas Berhad are associated (or correlated) with Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of PETRONAS Gas i.e., PETRONAS Gas and Dalata Hotel go up and down completely randomly.

Pair Corralation between PETRONAS Gas and Dalata Hotel

Assuming the 90 days horizon PETRONAS Gas Berhad is expected to generate 3.03 times more return on investment than Dalata Hotel. However, PETRONAS Gas is 3.03 times more volatile than Dalata Hotel Group. It trades about 0.03 of its potential returns per unit of risk. Dalata Hotel Group is currently generating about 0.04 per unit of risk. If you would invest  409.00  in PETRONAS Gas Berhad on October 11, 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	Flat
Strength	Insignificant
Accuracy	58.18%
Values	Daily Returns

PETRONAS Gas Berhad  vs.  Dalata Hotel Group

PETRONAS Gas Berhad

Risk-Adjusted Performance

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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.

Dalata Hotel Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalata Hotel Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Dalata Hotel is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PETRONAS Gas and Dalata Hotel

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

The idea behind PETRONAS Gas Berhad and Dalata Hotel Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.