Correlation Between Bank Rakyat and New Ulm

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

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

Diversification Opportunities for Bank Rakyat and New Ulm

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Correlation Coefficient

Bank Rakyat  New Ulm

Pay attention - limited upside

The 3 months correlation between Bank and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and New Ulm Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Ulm Telecom 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 New Ulm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Ulm Telecom has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and New Ulm go up and down completely randomly.

Pair Corralation between Bank Rakyat and New Ulm

If you would invest  1,326  in Bank Rakyat on September 5, 2024 and sell it today you would lose (9.00) from holding Bank Rakyat or give up 0.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.8%
Values	Daily Returns

Bank Rakyat  vs.  New Ulm Telecom

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 weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

New Ulm Telecom

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days New Ulm Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, New Ulm is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Rakyat and New Ulm

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

The idea behind Bank Rakyat and New Ulm Telecom 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.