Correlation Between RHB Bank and PIE Industrial
Can any of the company-specific risk be diversified away by investing in both RHB Bank and PIE Industrial 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 PIE Industrial 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 PIE Industrial Bhd, you can compare the effects of market volatilities on RHB Bank and PIE Industrial 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 PIE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHB Bank and PIE Industrial.
Diversification Opportunities for RHB Bank and PIE Industrial
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RHB and PIE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding RHB Bank Bhd and PIE Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIE Industrial Bhd 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 PIE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIE Industrial Bhd has no effect on the direction of RHB Bank i.e., RHB Bank and PIE Industrial go up and down completely randomly.
Pair Corralation between RHB Bank and PIE Industrial
Assuming the 90 days trading horizon RHB Bank Bhd is expected to generate 0.28 times more return on investment than PIE Industrial. However, RHB Bank Bhd is 3.55 times less risky than PIE Industrial. It trades about 0.09 of its potential returns per unit of risk. PIE Industrial Bhd is currently generating about 0.02 per unit of risk. If you would invest 506.00 in RHB Bank Bhd on December 2, 2024 and sell it today you would earn a total of 185.00 from holding RHB Bank Bhd or generate 36.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
RHB Bank Bhd vs. PIE Industrial Bhd
Performance |
| Timeline |
| RHB Bank Bhd |
| PIE Industrial Bhd |
RHB Bank and PIE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RHB Bank and PIE Industrial
The main advantage of trading using opposite RHB Bank and PIE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHB Bank position performs unexpectedly, PIE Industrial 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 PIE Industrial will offset losses from the drop in PIE Industrial's long position.| RHB Bank vs. ES Ceramics Technology | RHB Bank vs. IHH Healthcare Bhd | RHB Bank vs. Melewar Industrial Group | RHB Bank vs. Sapura Industrial Bhd |
| PIE Industrial vs. Public Bank Bhd | PIE Industrial vs. BP Plastics Holding | PIE Industrial vs. Choo Bee Metal | PIE Industrial vs. ECM Libra Financial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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