Correlation Between Primo Brands and PETRONAS Gas
Can any of the company-specific risk be diversified away by investing in both Primo Brands 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 Primo Brands and PETRONAS Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primo Brands and PETRONAS Gas Berhad, you can compare the effects of market volatilities on Primo Brands 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 Primo Brands with a short position of PETRONAS Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primo Brands and PETRONAS Gas.
Diversification Opportunities for Primo Brands and PETRONAS Gas
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Primo and PETRONAS is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands 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 Primo Brands 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 Primo Brands 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 Primo Brands i.e., Primo Brands and PETRONAS Gas go up and down completely randomly.
Pair Corralation between Primo Brands and PETRONAS Gas
Given the investment horizon of 90 days Primo Brands is expected to generate 1.05 times less return on investment than PETRONAS Gas. But when comparing it to its historical volatility, Primo Brands is 3.91 times less risky than PETRONAS Gas. It trades about 0.11 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 24, 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 | Weak |
Accuracy | 57.69% |
Values | Daily Returns |
Primo Brands vs. PETRONAS Gas Berhad
Performance |
Timeline |
Primo Brands |
PETRONAS Gas Berhad |
Primo Brands and PETRONAS Gas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Primo Brands and PETRONAS Gas
The main advantage of trading using opposite Primo Brands and PETRONAS Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primo Brands 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.Primo Brands vs. The Coca Cola | Primo Brands vs. National Beverage Corp | Primo Brands vs. Keurig Dr Pepper | Primo Brands vs. Coca Cola Femsa SAB |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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