Correlation Between PETRONAS Gas and Mosaic

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

Diversification Opportunities for PETRONAS Gas and Mosaic

0.59

Correlation Coefficient

PETRONAS Gas  Mosaic

Very weak diversification

The 3 months correlation between PETRONAS and Mosaic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PETRONAS Gas Berhad and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of PETRONAS Gas i.e., PETRONAS Gas and Mosaic go up and down completely randomly.

Pair Corralation between PETRONAS Gas and Mosaic

Assuming the 90 days horizon PETRONAS Gas Berhad is expected to under-perform the Mosaic. But the pink sheet apears to be less risky and, when comparing its historical volatility, PETRONAS Gas Berhad is 6.34 times less risky than Mosaic. The pink sheet trades about -0.14 of its potential returns per unit of risk. The The Mosaic is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,561  in The Mosaic on October 8, 2024 and sell it today you would lose (46.00) from holding The Mosaic or give up 1.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

PETRONAS Gas Berhad  vs.  The Mosaic

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

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PETRONAS Gas and Mosaic

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

The idea behind PETRONAS Gas Berhad and The Mosaic 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.