Correlation Between Bank Rakyat and Southern BancShares
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Southern BancShares 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 Southern BancShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Southern BancShares NC, you can compare the effects of market volatilities on Bank Rakyat and Southern BancShares 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 Southern BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Southern BancShares.
Diversification Opportunities for Bank Rakyat and Southern BancShares
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Southern is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Southern BancShares NC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern BancShares 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 Southern BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern BancShares has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Southern BancShares go up and down completely randomly.
Pair Corralation between Bank Rakyat and Southern BancShares
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Southern BancShares. In addition to that, Bank Rakyat is 2.23 times more volatile than Southern BancShares NC. It trades about -0.02 of its total potential returns per unit of risk. Southern BancShares NC is currently generating about 0.04 per unit of volatility. If you would invest 810,000 in Southern BancShares NC on December 27, 2024 and sell it today you would earn a total of 20,000 from holding Southern BancShares NC or generate 2.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Rakyat vs. Southern BancShares NC
Performance |
Timeline |
Bank Rakyat |
Southern BancShares |
Bank Rakyat and Southern BancShares Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Rakyat and Southern BancShares
The main advantage of trading using opposite Bank Rakyat and Southern BancShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Southern BancShares 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 Southern BancShares will offset losses from the drop in Southern BancShares' long position.Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
Southern BancShares vs. Nmb Financial Corp | Southern BancShares vs. Hang Seng Bank | Southern BancShares vs. Merchants Marine Bancorp | Southern BancShares vs. Mission Valley Bancorp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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