Correlation Between RHB Bank and Oriental Food
Can any of the company-specific risk be diversified away by investing in both RHB Bank and Oriental Food 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 Oriental Food 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 Oriental Food Industries, you can compare the effects of market volatilities on RHB Bank and Oriental Food 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 Oriental Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHB Bank and Oriental Food.
Diversification Opportunities for RHB Bank and Oriental Food
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RHB and Oriental is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding RHB Bank Bhd and Oriental Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Food Industries 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 Oriental Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Food Industries has no effect on the direction of RHB Bank i.e., RHB Bank and Oriental Food go up and down completely randomly.
Pair Corralation between RHB Bank and Oriental Food
Assuming the 90 days trading horizon RHB Bank Bhd is expected to generate 0.37 times more return on investment than Oriental Food. However, RHB Bank Bhd is 2.69 times less risky than Oriental Food. It trades about 0.12 of its potential returns per unit of risk. Oriental Food Industries is currently generating about -0.01 per unit of risk. If you would invest 522.00 in RHB Bank Bhd on November 3, 2024 and sell it today you would earn a total of 121.00 from holding RHB Bank Bhd or generate 23.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
RHB Bank Bhd vs. Oriental Food Industries
Performance |
| Timeline |
| RHB Bank Bhd |
| Oriental Food Industries |
RHB Bank and Oriental Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RHB Bank and Oriental Food
The main advantage of trading using opposite RHB Bank and Oriental Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHB Bank position performs unexpectedly, Oriental Food 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 Oriental Food will offset losses from the drop in Oriental Food's long position.| RHB Bank vs. Apollo Food Holdings | RHB Bank vs. Press Metal Bhd | RHB Bank vs. Senheng New Retail | RHB Bank vs. Mercury Industries Bhd |
| Oriental Food vs. Binasat Communications Bhd | Oriental Food vs. Carlsberg Brewery Malaysia | Oriental Food vs. Sports Toto Berhad | Oriental Food vs. Sunway Construction Group |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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