Correlation Between BANK RAKYAT and SIEMENS AG

Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and SIEMENS AG 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 SIEMENS AG 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 SIEMENS AG SP, you can compare the effects of market volatilities on BANK RAKYAT and SIEMENS AG 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 SIEMENS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and SIEMENS AG.

Diversification Opportunities for BANK RAKYAT and SIEMENS AG

-0.76

Correlation Coefficient

BANK RAKYAT  SIEMENS AG

Pay attention - limited upside

The 3 months correlation between BANK and SIEMENS is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and SIEMENS AG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIEMENS AG SP 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 SIEMENS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIEMENS AG SP has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and SIEMENS AG go up and down completely randomly.

Pair Corralation between BANK RAKYAT and SIEMENS AG

Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 3.99 times less return on investment than SIEMENS AG. In addition to that, BANK RAKYAT is 2.15 times more volatile than SIEMENS AG SP. It trades about 0.01 of its total potential returns per unit of risk. SIEMENS AG SP is currently generating about 0.1 per unit of volatility. If you would invest  9,378  in SIEMENS AG SP on December 30, 2024 and sell it today you would earn a total of  1,322  from holding SIEMENS AG SP or generate 14.1% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  SIEMENS AG SP

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 rather sound technical and fundamental indicators, BANK RAKYAT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SIEMENS AG SP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SIEMENS AG SP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SIEMENS AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and SIEMENS AG

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

The idea behind BANK RAKYAT IND and SIEMENS AG SP 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.