Correlation Between Radiant Globaltech and Hong Leong
Can any of the company-specific risk be diversified away by investing in both Radiant Globaltech and Hong Leong 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 Radiant Globaltech and Hong Leong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radiant Globaltech Bhd and Hong Leong Bank, you can compare the effects of market volatilities on Radiant Globaltech and Hong Leong 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 Radiant Globaltech with a short position of Hong Leong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Globaltech and Hong Leong.
Diversification Opportunities for Radiant Globaltech and Hong Leong
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Radiant and Hong is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Globaltech Bhd and Hong Leong Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Leong Bank and Radiant Globaltech 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 Radiant Globaltech Bhd are associated (or correlated) with Hong Leong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Leong Bank has no effect on the direction of Radiant Globaltech i.e., Radiant Globaltech and Hong Leong go up and down completely randomly.
Pair Corralation between Radiant Globaltech and Hong Leong
Assuming the 90 days trading horizon Radiant Globaltech Bhd is expected to generate 2.42 times more return on investment than Hong Leong. However, Radiant Globaltech is 2.42 times more volatile than Hong Leong Bank. It trades about 0.08 of its potential returns per unit of risk. Hong Leong Bank is currently generating about 0.02 per unit of risk. If you would invest 33.00 in Radiant Globaltech Bhd on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Radiant Globaltech Bhd or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Radiant Globaltech Bhd vs. Hong Leong Bank
Performance |
| Timeline |
| Radiant Globaltech Bhd |
| Hong Leong Bank |
Radiant Globaltech and Hong Leong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radiant Globaltech and Hong Leong
The main advantage of trading using opposite Radiant Globaltech and Hong Leong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radiant Globaltech position performs unexpectedly, Hong Leong 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 Hong Leong will offset losses from the drop in Hong Leong's long position.| Radiant Globaltech vs. Digistar Bhd | Radiant Globaltech vs. Minetech Resources Bhd | Radiant Globaltech vs. Swift Haulage Bhd | Radiant Globaltech vs. Bina Darulaman 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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