Correlation Between KINGBOARD CHEMICAL and BANK RAKYAT

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

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

Diversification Opportunities for KINGBOARD CHEMICAL and BANK RAKYAT

-0.45

Correlation Coefficient

KINGBOARD CHEMICAL  BANK RAKYAT

Very good diversification

The 3 months correlation between KINGBOARD and BANK is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and BANK RAKYAT go up and down completely randomly.

Pair Corralation between KINGBOARD CHEMICAL and BANK RAKYAT

Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 2.66 times more return on investment than BANK RAKYAT. However, KINGBOARD CHEMICAL is 2.66 times more volatile than BANK RAKYAT IND. It trades about 0.11 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.06 per unit of risk. If you would invest  196.00  in KINGBOARD CHEMICAL on October 7, 2024 and sell it today you would earn a total of  30.00  from holding KINGBOARD CHEMICAL or generate 15.31% return on investment over 90 days.

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

KINGBOARD CHEMICAL  vs.  BANK RAKYAT IND

KINGBOARD CHEMICAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KINGBOARD CHEMICAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, KINGBOARD CHEMICAL may actually be approaching a critical reversion point that can send shares even higher in February 2025.

BANK RAKYAT IND

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with KINGBOARD CHEMICAL and BANK RAKYAT

The main advantage of trading using opposite KINGBOARD CHEMICAL and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.