Correlation Between GOLD ROAD and BANK RAKYAT

Can any of the company-specific risk be diversified away by investing in both GOLD ROAD 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 GOLD ROAD and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOLD ROAD RES and BANK RAKYAT IND, you can compare the effects of market volatilities on GOLD ROAD 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 GOLD ROAD with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and BANK RAKYAT.

Diversification Opportunities for GOLD ROAD and BANK RAKYAT

-0.09

Correlation Coefficient

GOLD ROAD  BANK RAKYAT

Good diversification

The 3 months correlation between GOLD and BANK is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND and GOLD ROAD 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 GOLD ROAD RES 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 IND has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and BANK RAKYAT go up and down completely randomly.

Pair Corralation between GOLD ROAD and BANK RAKYAT

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.79 times more return on investment than BANK RAKYAT. However, GOLD ROAD is 1.79 times more volatile than BANK RAKYAT IND. It trades about 0.2 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.13 per unit of risk. If you would invest  120.00  in GOLD ROAD RES on December 28, 2024 and sell it today you would earn a total of  48.00  from holding GOLD ROAD RES or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

GOLD ROAD RES  vs.  BANK RAKYAT IND

GOLD ROAD RES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with GOLD ROAD and BANK RAKYAT

The main advantage of trading using opposite GOLD ROAD and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD 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 GOLD ROAD RES and BANK RAKYAT IND 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.