Correlation Between Astar and RCE Capital
Can any of the company-specific risk be diversified away by investing in both Astar 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 Astar and RCE Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and RCE Capital Berhad, you can compare the effects of market volatilities on Astar 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 Astar with a short position of RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and RCE Capital.
Diversification Opportunities for Astar and RCE Capital
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Astar and RCE is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Astar 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 Astar 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 Astar 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 Astar i.e., Astar and RCE Capital go up and down completely randomly.
Pair Corralation between Astar and RCE Capital
Assuming the 90 days trading horizon Astar is expected to under-perform the RCE Capital. In addition to that, Astar is 6.13 times more volatile than RCE Capital Berhad. It trades about -0.15 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Astar vs. RCE Capital Berhad
Performance |
| Timeline |
| Astar |
| RCE Capital Berhad |
Astar and RCE Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and RCE Capital
The main advantage of trading using opposite Astar and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar 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.The idea behind Astar and RCE Capital Berhad pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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