Correlation Between Gamuda Bhd and Public Bank

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

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

Diversification Opportunities for Gamuda Bhd and Public Bank

-0.4

Correlation Coefficient

Gamuda Bhd  Public Bank

Very good diversification

The 3 months correlation between Gamuda and Public is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gamuda Bhd and Public Bank Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Bank Bhd and Gamuda Bhd 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 Gamuda Bhd are associated (or correlated) with Public Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Bank Bhd has no effect on the direction of Gamuda Bhd i.e., Gamuda Bhd and Public Bank go up and down completely randomly.

Pair Corralation between Gamuda Bhd and Public Bank

Assuming the 90 days trading horizon Gamuda Bhd is expected to generate 1.21 times more return on investment than Public Bank. However, Gamuda Bhd is 1.21 times more volatile than Public Bank Bhd. It trades about 0.23 of its potential returns per unit of risk. Public Bank Bhd is currently generating about -0.05 per unit of risk. If you would invest  780.00  in Gamuda Bhd on September 18, 2024 and sell it today you would earn a total of  181.00  from holding Gamuda Bhd or generate 23.21% return on investment over 90 days.

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

Gamuda Bhd  vs.  Public Bank Bhd

Gamuda Bhd

Risk-Adjusted Performance

18 of 100

Solid

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

Public Bank Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Bank Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Public Bank 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 Gamuda Bhd and Public Bank

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

The idea behind Gamuda Bhd and Public 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.