Correlation Between Asian Pac and RHB Bank
Can any of the company-specific risk be diversified away by investing in both Asian Pac 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 Asian Pac and RHB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asian Pac Holdings and RHB Bank Bhd, you can compare the effects of market volatilities on Asian Pac 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 Asian Pac with a short position of RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asian Pac and RHB Bank.
Diversification Opportunities for Asian Pac and RHB Bank
Pay attention - limited upside
The 3 months correlation between Asian and RHB is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Asian Pac Holdings 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 Asian Pac 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 Asian Pac Holdings 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 Asian Pac i.e., Asian Pac and RHB Bank go up and down completely randomly.
Pair Corralation between Asian Pac and RHB Bank
Assuming the 90 days trading horizon Asian Pac Holdings is expected to under-perform the RHB Bank. In addition to that, Asian Pac is 3.26 times more volatile than RHB Bank Bhd. It trades about -0.03 of its total potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.05 per unit of volatility. If you would invest 618.00 in RHB Bank Bhd on September 25, 2024 and sell it today you would earn a total of 18.00 from holding RHB Bank Bhd or generate 2.91% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Asian Pac Holdings vs. RHB Bank Bhd
Performance |
Timeline |
Asian Pac Holdings |
RHB Bank Bhd |
Asian Pac and RHB Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Asian Pac and RHB Bank
The main advantage of trading using opposite Asian Pac and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asian Pac 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.Asian Pac vs. SFP Tech Holdings | Asian Pac vs. Resintech Bhd | Asian Pac vs. Al Aqar Healthcare | Asian Pac vs. Supercomnet Technologies Bhd |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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