Correlation Between BANK RAKYAT and Nintendo

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

By analyzing existing cross correlation between BANK RAKYAT IND and Nintendo Co, you can compare the effects of market volatilities on BANK RAKYAT and Nintendo 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 Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Nintendo.

Diversification Opportunities for BANK RAKYAT and Nintendo

-0.35

Correlation Coefficient

BANK RAKYAT  Nintendo

Very good diversification

The 3 months correlation between BANK and Nintendo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Nintendo Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo 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 IND are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Nintendo go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Nintendo

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Nintendo. In addition to that, BANK RAKYAT is 1.02 times more volatile than Nintendo Co. It trades about -0.02 of its total potential returns per unit of risk. Nintendo Co is currently generating about 0.07 per unit of volatility. If you would invest  854.00  in Nintendo Co on December 2, 2024 and sell it today you would earn a total of  896.00  from holding Nintendo Co or generate 104.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BANK RAKYAT IND  vs.  Nintendo Co

BANK RAKYAT IND

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK RAKYAT IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nintendo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nintendo Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nintendo reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and Nintendo

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

The idea behind BANK RAKYAT IND and Nintendo Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.