Correlation Between Citizens Bancshares and Bank Rakyat

Can any of the company-specific risk be diversified away by investing in both Citizens Bancshares and Bank Rakyat 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 Citizens Bancshares and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Citizens Bancshares Corp and Bank Rakyat, you can compare the effects of market volatilities on Citizens Bancshares and Bank Rakyat 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 Citizens Bancshares with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citizens Bancshares and Bank Rakyat.

Diversification Opportunities for Citizens Bancshares and Bank Rakyat

-0.33

Correlation Coefficient

Citizens Bancshares  Bank Rakyat

Very good diversification

The 3 months correlation between Citizens and Bank is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Citizens Bancshares Corp and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Citizens Bancshares 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 Citizens Bancshares Corp are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat has no effect on the direction of Citizens Bancshares i.e., Citizens Bancshares and Bank Rakyat go up and down completely randomly.

Pair Corralation between Citizens Bancshares and Bank Rakyat

Given the investment horizon of 90 days Citizens Bancshares Corp is expected to generate 0.5 times more return on investment than Bank Rakyat. However, Citizens Bancshares Corp is 2.0 times less risky than Bank Rakyat. It trades about 0.07 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.05 per unit of risk. If you would invest  4,898  in Citizens Bancshares Corp on December 21, 2024 and sell it today you would earn a total of  287.00  from holding Citizens Bancshares Corp or generate 5.86% return on investment over 90 days.

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

Citizens Bancshares Corp  vs.  Bank Rakyat

Citizens Bancshares Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancshares Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Citizens Bancshares may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bank Rakyat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Citizens Bancshares and Bank Rakyat

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

The idea behind Citizens Bancshares Corp and Bank Rakyat 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.