Correlation Between Public Bank and Brite Tech
Can any of the company-specific risk be diversified away by investing in both Public Bank and Brite Tech 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 Public Bank and Brite Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Public Bank Bhd and Brite Tech Bhd, you can compare the effects of market volatilities on Public Bank and Brite Tech 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 Public Bank with a short position of Brite Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and Brite Tech.
Diversification Opportunities for Public Bank and Brite Tech
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Public and Brite is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and Brite Tech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brite Tech Bhd and Public 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 Public Bank Bhd are associated (or correlated) with Brite Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brite Tech Bhd has no effect on the direction of Public Bank i.e., Public Bank and Brite Tech go up and down completely randomly.
Pair Corralation between Public Bank and Brite Tech
Assuming the 90 days trading horizon Public Bank is expected to generate 1.79 times less return on investment than Brite Tech. But when comparing it to its historical volatility, Public Bank Bhd is 3.55 times less risky than Brite Tech. It trades about 0.04 of its potential returns per unit of risk. Brite Tech Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Brite Tech Bhd on September 23, 2024 and sell it today you would earn a total of 2.00 from holding Brite Tech Bhd or generate 7.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.11% |
Values | Daily Returns |
Public Bank Bhd vs. Brite Tech Bhd
Performance |
Timeline |
Public Bank Bhd |
Brite Tech Bhd |
Public Bank and Brite Tech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Public Bank and Brite Tech
The main advantage of trading using opposite Public Bank and Brite Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Bank position performs unexpectedly, Brite Tech 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 Brite Tech will offset losses from the drop in Brite Tech's long position.Public Bank vs. Malayan Banking Bhd | Public Bank vs. Hong Leong Bank | Public Bank vs. RHB Bank Bhd | Public Bank vs. Genetec Technology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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