Correlation Between BANK RAKYAT and WT OFFSHORE

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

Diversification Opportunities for BANK RAKYAT and WT OFFSHORE

0.38

Correlation Coefficient

BANK RAKYAT  WT OFFSHORE

Weak diversification

The 3 months correlation between BANK and UWV is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and WT OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT OFFSHORE 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 WT OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT OFFSHORE has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and WT OFFSHORE go up and down completely randomly.

Pair Corralation between BANK RAKYAT and WT OFFSHORE

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the WT OFFSHORE. In addition to that, BANK RAKYAT is 1.39 times more volatile than WT OFFSHORE. It trades about -0.02 of its total potential returns per unit of risk. WT OFFSHORE is currently generating about 0.05 per unit of volatility. If you would invest  136.00  in WT OFFSHORE on December 20, 2024 and sell it today you would earn a total of  11.00  from holding WT OFFSHORE or generate 8.09% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  WT OFFSHORE

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 latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

WT OFFSHORE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WT OFFSHORE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WT OFFSHORE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and WT OFFSHORE

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

The idea behind BANK RAKYAT IND and WT OFFSHORE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.