Correlation Between Bank Rakyat and GMéxico Transportes

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

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

Diversification Opportunities for Bank Rakyat and GMéxico Transportes

-0.44

Correlation Coefficient

Bank Rakyat  GMéxico Transportes

Very good diversification

The 3 months correlation between Bank and GMéxico is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and GMxico Transportes SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMxico Transportes SAB 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 GMéxico Transportes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMxico Transportes SAB has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and GMéxico Transportes go up and down completely randomly.

Pair Corralation between Bank Rakyat and GMéxico Transportes

Assuming the 90 days horizon Bank Rakyat is expected to under-perform the GMéxico Transportes. In addition to that, Bank Rakyat is 2.63 times more volatile than GMxico Transportes SAB. It trades about 0.0 of its total potential returns per unit of risk. GMxico Transportes SAB is currently generating about 0.06 per unit of volatility. If you would invest  160.00  in GMxico Transportes SAB on December 19, 2024 and sell it today you would earn a total of  7.00  from holding GMxico Transportes SAB or generate 4.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Bank Rakyat  vs.  GMxico Transportes SAB

Bank Rakyat

Risk-Adjusted Performance

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 fairly strong forward-looking signals, Bank Rakyat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GMxico Transportes SAB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, GMéxico Transportes is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Rakyat and GMéxico Transportes

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

The idea behind Bank Rakyat and GMxico Transportes SAB 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.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.