Correlation Between CSC Steel and RHB Bank

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

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

Diversification Opportunities for CSC Steel and RHB Bank

-0.74

Correlation Coefficient

CSC Steel  RHB Bank

Pay attention - limited upside

The 3 months correlation between CSC and RHB is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding CSC Steel 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 CSC Steel 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 CSC Steel 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 CSC Steel i.e., CSC Steel and RHB Bank go up and down completely randomly.

Pair Corralation between CSC Steel and RHB Bank

Assuming the 90 days trading horizon CSC Steel Holdings is expected to under-perform the RHB Bank. In addition to that, CSC Steel is 1.07 times more volatile than RHB Bank Bhd. It trades about -0.1 of its total potential returns per unit of risk. RHB Bank Bhd is currently generating about 0.24 per unit of volatility. If you would invest  592.00  in RHB Bank Bhd on September 3, 2024 and sell it today you would earn a total of  84.00  from holding RHB Bank Bhd or generate 14.19% return on investment over 90 days.

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

CSC Steel Holdings  vs.  RHB Bank Bhd

CSC Steel Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSC Steel 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.

RHB Bank Bhd

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RHB Bank Bhd are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, RHB Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSC Steel and RHB Bank

The main advantage of trading using opposite CSC Steel and RHB Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSC Steel 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.

The idea behind CSC Steel Holdings and RHB Bank Bhd 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.