Correlation Between Berjaya Food and RHB Bank
Can any of the company-specific risk be diversified away by investing in both Berjaya Food 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 Berjaya Food and RHB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Berjaya Food Bhd and RHB Bank Bhd, you can compare the effects of market volatilities on Berjaya Food 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 Berjaya Food with a short position of RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berjaya Food and RHB Bank.
Diversification Opportunities for Berjaya Food and RHB Bank
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Berjaya and RHB is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Berjaya Food 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 Berjaya Food 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 Berjaya Food 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 Berjaya Food i.e., Berjaya Food and RHB Bank go up and down completely randomly.
Pair Corralation between Berjaya Food and RHB Bank
Assuming the 90 days trading horizon Berjaya Food Bhd is expected to generate 5.44 times more return on investment than RHB Bank. However, Berjaya Food is 5.44 times more volatile than RHB Bank Bhd. It trades about 0.38 of its potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.0 per unit of risk. If you would invest 35.00 in Berjaya Food Bhd on October 23, 2024 and sell it today you would earn a total of 11.00 from holding Berjaya Food Bhd or generate 31.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Berjaya Food Bhd vs. RHB Bank Bhd
Performance |
| Timeline |
| Berjaya Food Bhd |
| RHB Bank Bhd |
Berjaya Food and RHB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Berjaya Food and RHB Bank
The main advantage of trading using opposite Berjaya Food and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Berjaya Food 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.| Berjaya Food vs. Genting Malaysia Bhd | Berjaya Food vs. Shangri La Hotels | Berjaya Food vs. ECM Libra Financial | Berjaya Food vs. Genetec Technology Bhd |
| RHB Bank vs. Public Packages Holdings | RHB Bank vs. Supercomnet Technologies Bhd | RHB Bank vs. MClean Technologies Bhd | RHB Bank vs. British American Tobacco |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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