Correlation Between Public Bank and RCE Capital
Can any of the company-specific risk be diversified away by investing in both Public Bank and RCE Capital 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 Public Bank and RCE Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Bank Bhd and RCE Capital Berhad, you can compare the effects of market volatilities on Public Bank and RCE Capital 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 Public Bank with a short position of RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and RCE Capital.
Diversification Opportunities for Public Bank and RCE Capital
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Public and RCE is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and RCE Capital Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCE Capital Berhad and Public 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 Public Bank Bhd are associated (or correlated) with RCE Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCE Capital Berhad has no effect on the direction of Public Bank i.e., Public Bank and RCE Capital go up and down completely randomly.
Pair Corralation between Public Bank and RCE Capital
Assuming the 90 days trading horizon Public Bank Bhd is expected to under-perform the RCE Capital. In addition to that, Public Bank is 1.09 times more volatile than RCE Capital Berhad. It trades about -0.27 of its total potential returns per unit of risk. RCE Capital Berhad is currently generating about -0.24 per unit of volatility. If you would invest 154.00 in RCE Capital Berhad on October 23, 2024 and sell it today you would lose (6.00) from holding RCE Capital Berhad or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Public Bank Bhd vs. RCE Capital Berhad
Performance |
| Timeline |
| Public Bank Bhd |
| RCE Capital Berhad |
Public Bank and RCE Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Public Bank and RCE Capital
The main advantage of trading using opposite Public Bank and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Bank position performs unexpectedly, RCE Capital 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 RCE Capital will offset losses from the drop in RCE Capital's long position.| Public Bank vs. Kluang Rubber | Public Bank vs. KPJ Healthcare Bhd | Public Bank vs. Al Aqar Healthcare | Public Bank vs. Choo Bee Metal |
| RCE Capital vs. Star Media Group | RCE Capital vs. Ho Hup Construction | RCE Capital vs. Apollo Food Holdings | RCE Capital vs. Southern Steel 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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