Correlation Between Bank Rakyat and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and AmTrust Financial 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 Bank Rakyat and AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and AmTrust Financial Services, you can compare the effects of market volatilities on Bank Rakyat and AmTrust Financial 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 Bank Rakyat with a short position of AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and AmTrust Financial.
Diversification Opportunities for Bank Rakyat and AmTrust Financial
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and AmTrust is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial and Bank Rakyat 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 Bank Rakyat are associated (or correlated) with AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and AmTrust Financial go up and down completely randomly.
Pair Corralation between Bank Rakyat and AmTrust Financial
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the AmTrust Financial. In addition to that, Bank Rakyat is 1.04 times more volatile than AmTrust Financial Services. It trades about -0.03 of its total potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.0 per unit of volatility. If you would invest 1,437 in AmTrust Financial Services on November 21, 2024 and sell it today you would lose (17.00) from holding AmTrust Financial Services or give up 1.18% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Rakyat vs. AmTrust Financial Services
Performance |
Timeline |
Bank Rakyat |
AmTrust Financial |
Bank Rakyat and AmTrust Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Rakyat and AmTrust Financial
The main advantage of trading using opposite Bank Rakyat and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, AmTrust Financial 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 AmTrust Financial will offset losses from the drop in AmTrust Financial's long position.Bank Rakyat vs. Banco Bradesco SA | ||
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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