Correlation Between RHB Bank and Al Aqar

Can any of the company-specific risk be diversified away by investing in both RHB Bank and Al Aqar 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 RHB Bank and Al Aqar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RHB Bank Bhd and Al Aqar Healthcare, you can compare the effects of market volatilities on RHB Bank and Al Aqar 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 RHB Bank with a short position of Al Aqar. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHB Bank and Al Aqar.

Diversification Opportunities for RHB Bank and Al Aqar

-0.82

Correlation Coefficient

RHB Bank  Al Aqar

Pay attention - limited upside

The 3 months correlation between RHB and 5116 is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding RHB Bank Bhd and Al Aqar Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Aqar Healthcare and RHB 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 RHB Bank Bhd are associated (or correlated) with Al Aqar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Aqar Healthcare has no effect on the direction of RHB Bank i.e., RHB Bank and Al Aqar go up and down completely randomly.

Pair Corralation between RHB Bank and Al Aqar

Assuming the 90 days trading horizon RHB Bank Bhd is expected to generate 0.99 times more return on investment than Al Aqar. However, RHB Bank Bhd is 1.01 times less risky than Al Aqar. It trades about 0.19 of its potential returns per unit of risk. Al Aqar Healthcare is currently generating about -0.1 per unit of risk. If you would invest  620.00  in RHB Bank Bhd on December 30, 2024 and sell it today you would earn a total of  64.00  from holding RHB Bank Bhd or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

RHB Bank Bhd  vs.  Al Aqar Healthcare

RHB Bank Bhd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RHB Bank Bhd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, RHB Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Al Aqar Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Al Aqar Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Al Aqar is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with RHB Bank and Al Aqar

The main advantage of trading using opposite RHB Bank and Al Aqar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RHB Bank position performs unexpectedly, Al Aqar 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 Al Aqar will offset losses from the drop in Al Aqar's long position.

The idea behind RHB Bank Bhd and Al Aqar Healthcare 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.