Correlation Between BANK RAKYAT and CRRC

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

Diversification Opportunities for BANK RAKYAT and CRRC

0.0

Correlation Coefficient

BANK RAKYAT  CRRC

Pay attention - limited upside

The 3 months correlation between BANK and CRRC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited 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 CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and CRRC go up and down completely randomly.

Pair Corralation between BANK RAKYAT and CRRC

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the CRRC. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 2.04 times less risky than CRRC. The stock trades about -0.09 of its potential returns per unit of risk. The CRRC Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  27.00  in CRRC Limited on December 11, 2024 and sell it today you would earn a total of  34.00  from holding CRRC Limited or generate 125.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

BANK RAKYAT IND  vs.  CRRC Limited

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CRRC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRRC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CRRC 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 CRRC

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

The idea behind BANK RAKYAT IND and CRRC Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.