Correlation Between Bank Rakyat and NRBO Old

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

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

Diversification Opportunities for Bank Rakyat and NRBO Old

0.57

Correlation Coefficient

Bank Rakyat  NRBO Old

Very weak diversification

The 3 months correlation between Bank and NRBO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and NRBO Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRBO Old 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 NRBO Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRBO Old has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and NRBO Old go up and down completely randomly.

Pair Corralation between Bank Rakyat and NRBO Old

Assuming the 90 days horizon Bank Rakyat is expected to generate 0.61 times more return on investment than NRBO Old. However, Bank Rakyat is 1.64 times less risky than NRBO Old. It trades about -0.01 of its potential returns per unit of risk. NRBO Old is currently generating about -0.02 per unit of risk. If you would invest  1,264  in Bank Rakyat on December 28, 2024 and sell it today you would lose (60.00) from holding Bank Rakyat or give up 4.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	35.0%
Values	Daily Returns

Bank Rakyat  vs.  NRBO Old

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.

NRBO Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days NRBO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, NRBO Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bank Rakyat and NRBO Old

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

The idea behind Bank Rakyat and NRBO Old 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.