Correlation Between Grand River and Bank Rakyat

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

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

Diversification Opportunities for Grand River and Bank Rakyat

-0.11

Correlation Coefficient

Grand River  Bank Rakyat

Good diversification

The 3 months correlation between Grand and Bank is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Grand River Commerce and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Grand River 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 Grand River Commerce 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 Grand River i.e., Grand River and Bank Rakyat go up and down completely randomly.

Pair Corralation between Grand River and Bank Rakyat

Given the investment horizon of 90 days Grand River Commerce is expected to generate 0.92 times more return on investment than Bank Rakyat. However, Grand River Commerce is 1.09 times less risky than Bank Rakyat. It trades about 0.26 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.05 per unit of risk. If you would invest  295.00  in Grand River Commerce on October 23, 2024 and sell it today you would earn a total of  36.00  from holding Grand River Commerce or generate 12.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Grand River Commerce  vs.  Bank Rakyat

Grand River Commerce

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Grand River Commerce are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Grand River may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bank Rakyat

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Grand River and Bank Rakyat

The main advantage of trading using opposite Grand River and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand River 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 Grand River Commerce 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.