Correlation Between RHB Bank and ES Ceramics
Can any of the company-specific risk be diversified away by investing in both RHB Bank and ES Ceramics 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 RHB Bank and ES Ceramics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RHB Bank Bhd and ES Ceramics Technology, you can compare the effects of market volatilities on RHB Bank and ES Ceramics 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 RHB Bank with a short position of ES Ceramics. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHB Bank and ES Ceramics.
Diversification Opportunities for RHB Bank and ES Ceramics
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RHB and 0100 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding RHB Bank Bhd and ES Ceramics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES Ceramics Technology and RHB Bank 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 RHB Bank Bhd are associated (or correlated) with ES Ceramics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES Ceramics Technology has no effect on the direction of RHB Bank i.e., RHB Bank and ES Ceramics go up and down completely randomly.
Pair Corralation between RHB Bank and ES Ceramics
Assuming the 90 days trading horizon RHB Bank Bhd is expected to generate 0.19 times more return on investment than ES Ceramics. However, RHB Bank Bhd is 5.15 times less risky than ES Ceramics. It trades about 0.09 of its potential returns per unit of risk. ES Ceramics Technology is currently generating about 0.0 per unit of risk. If you would invest 505.00 in RHB Bank Bhd on August 30, 2024 and sell it today you would earn a total of 173.00 from holding RHB Bank Bhd or generate 34.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RHB Bank Bhd vs. ES Ceramics Technology
Performance |
| Timeline |
| RHB Bank Bhd |
| ES Ceramics Technology |
RHB Bank and ES Ceramics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RHB Bank and ES Ceramics
The main advantage of trading using opposite RHB Bank and ES Ceramics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHB Bank position performs unexpectedly, ES Ceramics 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 ES Ceramics will offset losses from the drop in ES Ceramics' long position.| RHB Bank vs. IHH Healthcare Bhd | RHB Bank vs. FARM FRESH BERHAD | RHB Bank vs. Southern Steel Bhd | RHB Bank vs. Ho Hup Construction |
| ES Ceramics vs. Minetech Resources Bhd | ES Ceramics vs. Sunzen Biotech Bhd | ES Ceramics vs. Hengyuan Refining | ES Ceramics vs. Impiana Hotels 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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