Correlation Between RHB Bank and Public Packages

Can any of the company-specific risk be diversified away by investing in both RHB Bank and Public Packages 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 Public Packages 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 Public Packages Holdings, you can compare the effects of market volatilities on RHB Bank and Public Packages 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 Public Packages. Check out your portfolio center. Please also check ongoing floating volatility patterns of RHB Bank and Public Packages.

Diversification Opportunities for RHB Bank and Public Packages

-0.75

Correlation Coefficient

RHB Bank  Public Packages

Pay attention - limited upside

The 3 months correlation between RHB and Public is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding RHB Bank Bhd and Public Packages Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Packages Holdings 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 Public Packages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Packages Holdings has no effect on the direction of RHB Bank i.e., RHB Bank and Public Packages go up and down completely randomly.

Pair Corralation between RHB Bank and Public Packages

Assuming the 90 days trading horizon RHB Bank is expected to generate 2.17 times less return on investment than Public Packages. But when comparing it to its historical volatility, RHB Bank Bhd is 1.37 times less risky than Public Packages. It trades about 0.1 of its potential returns per unit of risk. Public Packages Holdings is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  77.00  in Public Packages Holdings on September 4, 2024 and sell it today you would earn a total of  4.00  from holding Public Packages Holdings or generate 5.19% return on investment over 90 days.

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

RHB Bank Bhd  vs.  Public Packages Holdings

RHB Bank Bhd

Risk-Adjusted Performance

14 of 100

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 January 2025.

Public Packages Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Packages Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with RHB Bank and Public Packages

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

The idea behind RHB Bank Bhd and Public Packages Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.