Correlation Between MCB GROUP and RHT HOLDING

Can any of the company-specific risk be diversified away by investing in both MCB GROUP and RHT HOLDING 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 MCB GROUP and RHT HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MCB GROUP LIMITED and RHT HOLDING LTD, you can compare the effects of market volatilities on MCB GROUP and RHT HOLDING 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 MCB GROUP with a short position of RHT HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB GROUP and RHT HOLDING.

Diversification Opportunities for MCB GROUP and RHT HOLDING

-0.12

Correlation Coefficient

MCB GROUP  RHT HOLDING

Good diversification

The 3 months correlation between MCB and RHT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding MCB GROUP LIMITED and RHT HOLDING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RHT HOLDING LTD and MCB GROUP 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 MCB GROUP LIMITED are associated (or correlated) with RHT HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RHT HOLDING LTD has no effect on the direction of MCB GROUP i.e., MCB GROUP and RHT HOLDING go up and down completely randomly.

Pair Corralation between MCB GROUP and RHT HOLDING

Assuming the 90 days trading horizon MCB GROUP LIMITED is expected to generate 2.36 times more return on investment than RHT HOLDING. However, MCB GROUP is 2.36 times more volatile than RHT HOLDING LTD. It trades about 0.07 of its potential returns per unit of risk. RHT HOLDING LTD is currently generating about -0.13 per unit of risk. If you would invest  44,850  in MCB GROUP LIMITED on April 25, 2025 and sell it today you would earn a total of  1,350  from holding MCB GROUP LIMITED or generate 3.01% return on investment over 90 days.

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

MCB GROUP LIMITED  vs.  RHT HOLDING LTD

MCB GROUP LIMITED

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MCB GROUP LIMITED are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, MCB GROUP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

RHT HOLDING LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days RHT HOLDING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, RHT HOLDING is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MCB GROUP and RHT HOLDING

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

The idea behind MCB GROUP LIMITED and RHT HOLDING LTD 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.