Correlation Between Dagang Nexchange and RHB Bank
Can any of the company-specific risk be diversified away by investing in both Dagang Nexchange 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 Dagang Nexchange and RHB Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dagang Nexchange Bhd and RHB Bank Bhd, you can compare the effects of market volatilities on Dagang Nexchange 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 Dagang Nexchange with a short position of RHB Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dagang Nexchange and RHB Bank.
Diversification Opportunities for Dagang Nexchange and RHB Bank
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dagang and RHB is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dagang Nexchange Bhd 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 Dagang Nexchange 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 Dagang Nexchange Bhd 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 Dagang Nexchange i.e., Dagang Nexchange and RHB Bank go up and down completely randomly.
Pair Corralation between Dagang Nexchange and RHB Bank
Assuming the 90 days trading horizon Dagang Nexchange Bhd is expected to generate 2.65 times more return on investment than RHB Bank. However, Dagang Nexchange is 2.65 times more volatile than RHB Bank Bhd. It trades about 0.1 of its potential returns per unit of risk. RHB Bank Bhd is currently generating about -0.16 per unit of risk. If you would invest 36.00 in Dagang Nexchange Bhd on September 25, 2024 and sell it today you would earn a total of 2.00 from holding Dagang Nexchange Bhd or generate 5.56% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dagang Nexchange Bhd vs. RHB Bank Bhd
Performance |
Timeline |
Dagang Nexchange Bhd |
RHB Bank Bhd |
Dagang Nexchange and RHB Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dagang Nexchange and RHB Bank
The main advantage of trading using opposite Dagang Nexchange and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dagang Nexchange 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.Dagang Nexchange vs. Datasonic Group Bhd | Dagang Nexchange vs. Awanbiru Technology Bhd | Dagang Nexchange vs. Dataprep Holdings Bhd | Dagang Nexchange vs. Systech Bhd |
RHB Bank vs. Malayan Banking Bhd | RHB Bank vs. Public Bank Bhd | RHB Bank vs. Hong Leong Bank | RHB Bank vs. Genetec Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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