Correlation Between Sunway Construction and RHB Bank
Can any of the company-specific risk be diversified away by investing in both Sunway Construction 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 Sunway Construction and RHB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunway Construction Group and RHB Bank Bhd, you can compare the effects of market volatilities on Sunway Construction 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 Sunway Construction with a short position of RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunway Construction and RHB Bank.
Diversification Opportunities for Sunway Construction and RHB Bank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sunway and RHB is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sunway Construction Group 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 Sunway Construction 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 Sunway Construction Group 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 Sunway Construction i.e., Sunway Construction and RHB Bank go up and down completely randomly.
Pair Corralation between Sunway Construction and RHB Bank
Assuming the 90 days trading horizon Sunway Construction Group is expected to under-perform the RHB Bank. In addition to that, Sunway Construction is 3.13 times more volatile than RHB Bank Bhd. It trades about -0.04 of its total potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.23 per unit of volatility. If you would invest 641.00 in RHB Bank Bhd on August 31, 2024 and sell it today you would earn a total of 26.00 from holding RHB Bank Bhd or generate 4.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunway Construction Group vs. RHB Bank Bhd
Performance |
| Timeline |
| Sunway Construction |
| RHB Bank Bhd |
Sunway Construction and RHB Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunway Construction and RHB Bank
The main advantage of trading using opposite Sunway Construction and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunway Construction 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.| Sunway Construction vs. Kossan Rubber Industries | Sunway Construction vs. Cloudpoint Technology Berhad | Sunway Construction vs. Uchi Technologies Bhd | Sunway Construction vs. Awanbiru Technology Bhd |
| RHB Bank vs. DC HEALTHCARE HOLDINGS | RHB Bank vs. Press Metal Bhd | RHB Bank vs. Choo Bee Metal | RHB Bank vs. Rubberex M |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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