Correlation Between BANK RAKYAT and MTY Food

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

Diversification Opportunities for BANK RAKYAT and MTY Food

-0.54

Correlation Coefficient

BANK RAKYAT  MTY Food

Excellent diversification

The 3 months correlation between BANK and MTY is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food Group 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 MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and MTY Food go up and down completely randomly.

Pair Corralation between BANK RAKYAT and MTY Food

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the MTY Food. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.05 times less risky than MTY Food. The stock trades about -0.12 of its potential returns per unit of risk. The MTY Food Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,046  in MTY Food Group on October 6, 2024 and sell it today you would earn a total of  44.00  from holding MTY Food Group or generate 1.44% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  MTY Food Group

BANK RAKYAT IND

Risk-Adjusted Performance

0 of 100

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 basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

MTY Food Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTY Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANK RAKYAT and MTY Food

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

The idea behind BANK RAKYAT IND and MTY Food Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.