Correlation Between Jyske Bank and Bank Rakyat

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

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

Diversification Opportunities for Jyske Bank and Bank Rakyat

0.11

Correlation Coefficient

Jyske Bank  Bank Rakyat

Average diversification

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

Pair Corralation between Jyske Bank and Bank Rakyat

Assuming the 90 days horizon Jyske Bank AS is expected to generate 0.2 times more return on investment than Bank Rakyat. However, Jyske Bank AS is 5.02 times less risky than Bank Rakyat. It trades about 0.13 of its potential returns per unit of risk. Bank Rakyat is currently generating about 0.0 per unit of risk. If you would invest  1,361  in Jyske Bank AS on December 28, 2024 and sell it today you would earn a total of  68.00  from holding Jyske Bank AS or generate 5.0% return on investment over 90 days.

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

Jyske Bank AS  vs.  Bank Rakyat

Jyske Bank AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Bank AS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward-looking signals, Jyske Bank 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 Jyske Bank and Bank Rakyat

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