Correlation Between Bank Rakyat and Atlas Copco

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

By analyzing existing cross correlation between Bank Rakyat and Atlas Copco AB, you can compare the effects of market volatilities on Bank Rakyat and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Atlas Copco.

Diversification Opportunities for Bank Rakyat and Atlas Copco

-0.8

Correlation Coefficient

Bank Rakyat  Atlas Copco

Pay attention - limited upside

The 3 months correlation between Bank and Atlas is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Atlas Copco go up and down completely randomly.

Pair Corralation between Bank Rakyat and Atlas Copco

Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Atlas Copco. In addition to that, Bank Rakyat is 1.37 times more volatile than Atlas Copco AB. It trades about -0.16 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about 0.12 per unit of volatility. If you would invest  1,437  in Atlas Copco AB on August 31, 2024 and sell it today you would earn a total of  139.00  from holding Atlas Copco AB or generate 9.67% return on investment over 90 days.

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

Bank Rakyat  vs.  Atlas Copco AB

Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Atlas Copco AB

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Bank Rakyat and Atlas Copco

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

The idea behind Bank Rakyat and Atlas Copco AB 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.