Correlation Between Thunder Bridge and PETRONAS Gas

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

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

Diversification Opportunities for Thunder Bridge and PETRONAS Gas

-0.81

Correlation Coefficient

Thunder Bridge  PETRONAS Gas

Pay attention - limited upside

The 3 months correlation between Thunder and PETRONAS is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Bridge Capital 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 Thunder Bridge 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 Thunder Bridge Capital 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 Thunder Bridge i.e., Thunder Bridge and PETRONAS Gas go up and down completely randomly.

Pair Corralation between Thunder Bridge and PETRONAS Gas

Assuming the 90 days horizon Thunder Bridge Capital is expected to generate 11.85 times more return on investment than PETRONAS Gas. However, Thunder Bridge is 11.85 times more volatile than PETRONAS Gas Berhad. It trades about 0.1 of its potential returns per unit of risk. PETRONAS Gas Berhad is currently generating about -0.14 per unit of risk. If you would invest  1,050  in Thunder Bridge Capital on October 3, 2024 and sell it today you would earn a total of  192.00  from holding Thunder Bridge Capital or generate 18.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	80.33%
Values	Daily Returns

Thunder Bridge Capital  vs.  PETRONAS Gas Berhad

Thunder Bridge Capital

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Thunder Bridge unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Thunder Bridge and PETRONAS Gas

The main advantage of trading using opposite Thunder Bridge and PETRONAS Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Bridge 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 Thunder Bridge Capital 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.