Correlation Between BANK RAKYAT and H2O Retailing

Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and H2O Retailing 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 H2O Retailing 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 H2O Retailing, you can compare the effects of market volatilities on BANK RAKYAT and H2O Retailing 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 H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and H2O Retailing.

Diversification Opportunities for BANK RAKYAT and H2O Retailing

0.26

Correlation Coefficient

BANK RAKYAT  H2O Retailing

Modest diversification

The 3 months correlation between BANK and H2O is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing 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 H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and H2O Retailing go up and down completely randomly.

Pair Corralation between BANK RAKYAT and H2O Retailing

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the H2O Retailing. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.09 times less risky than H2O Retailing. The stock trades about -0.13 of its potential returns per unit of risk. The H2O Retailing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,330  in H2O Retailing on December 20, 2024 and sell it today you would earn a total of  30.00  from holding H2O Retailing or generate 2.26% 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.  H2O Retailing

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.

H2O Retailing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in H2O Retailing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, H2O Retailing 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 H2O Retailing

The main advantage of trading using opposite BANK RAKYAT and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.

The idea behind BANK RAKYAT IND and H2O Retailing 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.