Correlation Between JAPAN POST and Bank Rakyat

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

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

Diversification Opportunities for JAPAN POST and Bank Rakyat

0.0

Correlation Coefficient

JAPAN POST  Bank Rakyat

Pay attention - limited upside

The 3 months correlation between JAPAN and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and JAPAN POST 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 JAPAN POST BANK 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 JAPAN POST i.e., JAPAN POST and Bank Rakyat go up and down completely randomly.

Pair Corralation between JAPAN POST and Bank Rakyat

If you would invest  1,264  in Bank Rakyat on December 28, 2024 and sell it today you would lose (38.00) from holding Bank Rakyat or give up 3.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

JAPAN POST BANK  vs.  Bank Rakyat

JAPAN POST BANK

Risk-Adjusted Performance

Very Weak

Over the last 90 days JAPAN POST BANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, JAPAN POST is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 fairly strong forward-looking signals, Bank Rakyat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JAPAN POST and Bank Rakyat

The main advantage of trading using opposite JAPAN POST and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN POST 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 JAPAN POST BANK 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.