Correlation Between ES Ceramics and RHB Bank
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and RHB Bank 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 ES Ceramics and RHB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and RHB Bank Bhd, you can compare the effects of market volatilities on ES Ceramics and RHB Bank 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 ES Ceramics with a short position of RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and RHB Bank.
Diversification Opportunities for ES Ceramics and RHB Bank
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 0100 and RHB is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and RHB Bank Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHB Bank Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with RHB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHB Bank Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and RHB Bank go up and down completely randomly.
Pair Corralation between ES Ceramics and RHB Bank
Assuming the 90 days trading horizon ES Ceramics is expected to generate 6.06 times less return on investment than RHB Bank. In addition to that, ES Ceramics is 4.3 times more volatile than RHB Bank Bhd. It trades about 0.01 of its total potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.37 per unit of volatility. If you would invest 641.00 in RHB Bank Bhd on August 30, 2024 and sell it today you would earn a total of 37.00 from holding RHB Bank Bhd or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ES Ceramics Technology vs. RHB Bank Bhd
Performance |
| Timeline |
| ES Ceramics Technology |
| RHB Bank Bhd |
ES Ceramics and RHB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and RHB Bank
The main advantage of trading using opposite ES Ceramics and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, RHB Bank 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 RHB Bank will offset losses from the drop in RHB Bank's long position.| ES Ceramics vs. Mycron Steel Bhd | ES Ceramics vs. CSC Steel Holdings | ES Ceramics vs. Uchi Technologies Bhd | ES Ceramics vs. Radiant Globaltech Bhd |
| RHB Bank vs. Datasonic Group Bhd | RHB Bank vs. Choo Bee Metal | RHB Bank vs. Homeritz Bhd | RHB Bank vs. JF Technology BHD |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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