Correlation Between Bank Rakyat and Isabella Bank

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Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Isabella Bank 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 Isabella Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Isabella Bank, you can compare the effects of market volatilities on Bank Rakyat and Isabella Bank 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 Isabella Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Isabella Bank.

Diversification Opportunities for Bank Rakyat and Isabella Bank

-0.88
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Bank and Isabella is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Isabella Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isabella Bank 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 Isabella Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isabella Bank has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Isabella Bank go up and down completely randomly.

Pair Corralation between Bank Rakyat and Isabella Bank

Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Isabella Bank. In addition to that, Bank Rakyat is 1.21 times more volatile than Isabella Bank. It trades about -0.16 of its total potential returns per unit of risk. Isabella Bank is currently generating about 0.3 per unit of volatility. If you would invest  1,902  in Isabella Bank on August 31, 2024 and sell it today you would earn a total of  588.00  from holding Isabella Bank or generate 30.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bank Rakyat  vs.  Isabella Bank

 Performance 
       Timeline  
Bank Rakyat 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Isabella Bank 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Isabella Bank are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Isabella Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Bank Rakyat and Isabella Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Rakyat and Isabella Bank

The main advantage of trading using opposite Bank Rakyat and Isabella Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Isabella Bank 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 Isabella Bank will offset losses from the drop in Isabella Bank's long position.
The idea behind Bank Rakyat and Isabella Bank 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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