Correlation Between Bank Negara and Guangzhou

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

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

Diversification Opportunities for Bank Negara and Guangzhou

-0.74

Correlation Coefficient

Bank Negara  Guangzhou

Pay attention - limited upside

The 3 months correlation between Bank and Guangzhou is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Guangzhou RF Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou RF Properties and Bank Negara 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 Bank Negara Indonesia are associated (or correlated) with Guangzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou RF Properties has no effect on the direction of Bank Negara i.e., Bank Negara and Guangzhou go up and down completely randomly.

Pair Corralation between Bank Negara and Guangzhou

If you would invest  23.00  in Guangzhou RF Properties on September 20, 2024 and sell it today you would earn a total of  0.00  from holding Guangzhou RF Properties or generate 0.0% return on investment over 90 days.

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

Bank Negara Indonesia  vs.  Guangzhou RF Properties

Bank Negara Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Negara Indonesia 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Guangzhou RF Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou RF Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Guangzhou reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Negara and Guangzhou

The main advantage of trading using opposite Bank Negara and Guangzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Guangzhou 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 Guangzhou will offset losses from the drop in Guangzhou's long position.

The idea behind Bank Negara Indonesia and Guangzhou RF Properties 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.