Correlation Between RHB Bank and Sunway Construction
Can any of the company-specific risk be diversified away by investing in both RHB Bank and Sunway Construction 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 Sunway Construction 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 Sunway Construction Group, you can compare the effects of market volatilities on RHB Bank and Sunway Construction 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 Sunway Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHB Bank and Sunway Construction.
Diversification Opportunities for RHB Bank and Sunway Construction
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RHB and Sunway is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding RHB Bank Bhd and Sunway Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunway Construction 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 Sunway Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunway Construction has no effect on the direction of RHB Bank i.e., RHB Bank and Sunway Construction go up and down completely randomly.
Pair Corralation between RHB Bank and Sunway Construction
Assuming the 90 days trading horizon RHB Bank Bhd is expected to generate 0.39 times more return on investment than Sunway Construction. However, RHB Bank Bhd is 2.55 times less risky than Sunway Construction. It trades about 0.2 of its potential returns per unit of risk. Sunway Construction Group is currently generating about 0.06 per unit of risk. If you would invest 596.00 in RHB Bank Bhd on August 31, 2024 and sell it today you would earn a total of 71.00 from holding RHB Bank Bhd or generate 11.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RHB Bank Bhd vs. Sunway Construction Group
Performance |
| Timeline |
| RHB Bank Bhd |
| Sunway Construction |
RHB Bank and Sunway Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RHB Bank and Sunway Construction
The main advantage of trading using opposite RHB Bank and Sunway Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHB Bank position performs unexpectedly, Sunway Construction 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 Sunway Construction will offset losses from the drop in Sunway Construction's long position.| RHB Bank vs. DC HEALTHCARE HOLDINGS | RHB Bank vs. Press Metal Bhd | RHB Bank vs. Choo Bee Metal | RHB Bank vs. Rubberex M |
| Sunway Construction vs. Kossan Rubber Industries | Sunway Construction vs. Cloudpoint Technology Berhad | Sunway Construction vs. Uchi Technologies Bhd | Sunway Construction vs. Awanbiru 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 Stocks Directory module to find actively traded stocks across global markets.
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