Correlation Between Genting Malaysia and RHB Bank
Can any of the company-specific risk be diversified away by investing in both Genting Malaysia and RHB Bank 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 Genting Malaysia and RHB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genting Malaysia Bhd and RHB Bank Bhd, you can compare the effects of market volatilities on Genting Malaysia and RHB Bank 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 Genting Malaysia with a short position of RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genting Malaysia and RHB Bank.
Diversification Opportunities for Genting Malaysia and RHB Bank
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genting and RHB is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Genting Malaysia Bhd and RHB Bank Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHB Bank Bhd and Genting Malaysia 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 Genting Malaysia Bhd are associated (or correlated) with RHB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHB Bank Bhd has no effect on the direction of Genting Malaysia i.e., Genting Malaysia and RHB Bank go up and down completely randomly.
Pair Corralation between Genting Malaysia and RHB Bank
Assuming the 90 days trading horizon Genting Malaysia Bhd is expected to generate 3.87 times more return on investment than RHB Bank. However, Genting Malaysia is 3.87 times more volatile than RHB Bank Bhd. It trades about 0.27 of its potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.39 per unit of risk. If you would invest 222.00 in Genting Malaysia Bhd on November 18, 2024 and sell it today you would earn a total of 19.00 from holding Genting Malaysia Bhd or generate 8.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genting Malaysia Bhd vs. RHB Bank Bhd
Performance |
| Timeline |
| Genting Malaysia Bhd |
| RHB Bank Bhd |
Genting Malaysia and RHB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genting Malaysia and RHB Bank
The main advantage of trading using opposite Genting Malaysia and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genting Malaysia position performs unexpectedly, RHB Bank 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 RHB Bank will offset losses from the drop in RHB Bank's long position.| Genting Malaysia vs. Supercomnet Technologies Bhd | Genting Malaysia vs. Silver Ridge Holdings | Genting Malaysia vs. Magni Tech Industries | Genting Malaysia vs. Uchi Technologies Bhd |
| RHB Bank vs. YX Precious Metals | RHB Bank vs. Shangri La Hotels | RHB Bank vs. DC HEALTHCARE HOLDINGS | RHB Bank vs. Mercury Industries 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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