Correlation Between PETRONAS Gas and CVR Partners

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

Diversification Opportunities for PETRONAS Gas and CVR Partners

-0.55

Correlation Coefficient

PETRONAS Gas  CVR Partners

Excellent diversification

The 3 months correlation between PETRONAS and CVR is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PETRONAS Gas Berhad and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP 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 CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of PETRONAS Gas i.e., PETRONAS Gas and CVR Partners go up and down completely randomly.

Pair Corralation between PETRONAS Gas and CVR Partners

If you would invest  7,514  in CVR Partners LP on October 23, 2024 and sell it today you would earn a total of  880.00  from holding CVR Partners LP or generate 11.71% return on investment over 90 days.

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

PETRONAS Gas Berhad  vs.  CVR Partners LP

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

CVR Partners LP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Partners LP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, CVR Partners displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PETRONAS Gas and CVR Partners

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

The idea behind PETRONAS Gas Berhad and CVR Partners LP 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.