Correlation Between Public Bank and RCE Capital
Can any of the company-specific risk be diversified away by investing in both Public Bank and RCE Capital 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 RCE Capital 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 RCE Capital Berhad, you can compare the effects of market volatilities on Public Bank and RCE Capital 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 RCE Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Bank and RCE Capital.
Diversification Opportunities for Public Bank and RCE Capital
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Public and RCE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Public Bank Bhd and RCE Capital Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCE Capital Berhad 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 RCE Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCE Capital Berhad has no effect on the direction of Public Bank i.e., Public Bank and RCE Capital go up and down completely randomly.
Pair Corralation between Public Bank and RCE Capital
Assuming the 90 days trading horizon Public Bank Bhd is expected to generate 0.71 times more return on investment than RCE Capital. However, Public Bank Bhd is 1.41 times less risky than RCE Capital. It trades about -0.03 of its potential returns per unit of risk. RCE Capital Berhad is currently generating about -0.06 per unit of risk. If you would invest 463.00 in Public Bank Bhd on September 25, 2024 and sell it today you would lose (11.00) from holding Public Bank Bhd or give up 2.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Public Bank Bhd vs. RCE Capital Berhad
Performance |
Timeline |
Public Bank Bhd |
RCE Capital Berhad |
Public Bank and RCE Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Public Bank and RCE Capital
The main advantage of trading using opposite Public Bank and RCE Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Bank position performs unexpectedly, RCE Capital 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 RCE Capital will offset losses from the drop in RCE Capital'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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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