Correlation Between BANK RAKYAT and FORMPIPE SOFTWARE

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

Diversification Opportunities for BANK RAKYAT and FORMPIPE SOFTWARE

-0.31

Correlation Coefficient

BANK RAKYAT  FORMPIPE SOFTWARE

Very good diversification

The 3 months correlation between BANK and FORMPIPE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and FORMPIPE SOFTWARE AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORMPIPE SOFTWARE has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and FORMPIPE SOFTWARE go up and down completely randomly.

Pair Corralation between BANK RAKYAT and FORMPIPE SOFTWARE

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the FORMPIPE SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.04 times less risky than FORMPIPE SOFTWARE. The stock trades about -0.02 of its potential returns per unit of risk. The FORMPIPE SOFTWARE AB is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  210.00  in FORMPIPE SOFTWARE AB on September 1, 2024 and sell it today you would earn a total of  2.00  from holding FORMPIPE SOFTWARE AB or generate 0.95% 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.  FORMPIPE SOFTWARE AB

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 comparatively stable basic indicators, BANK RAKYAT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

FORMPIPE SOFTWARE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORMPIPE SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BANK RAKYAT and FORMPIPE SOFTWARE

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

The idea behind BANK RAKYAT IND and FORMPIPE SOFTWARE AB 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.

Check out your portfolio center.

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.