Correlation Between Absa Group and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Absa Group 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 Absa Group and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and Bank Rakyat, you can compare the effects of market volatilities on Absa Group 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 Absa Group with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and Bank Rakyat.
Diversification Opportunities for Absa Group and Bank Rakyat
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Absa and Bank is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Absa Group 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 Absa Group Limited 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 Absa Group i.e., Absa Group and Bank Rakyat go up and down completely randomly.
Pair Corralation between Absa Group and Bank Rakyat
Assuming the 90 days horizon Absa Group Limited is expected to generate 0.59 times more return on investment than Bank Rakyat. However, Absa Group Limited is 1.69 times less risky than Bank Rakyat. It trades about 0.04 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.03 per unit of risk. If you would invest 715.00 in Absa Group Limited on September 2, 2024 and sell it today you would earn a total of 96.00 from holding Absa Group Limited or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. Bank Rakyat
Performance |
| Timeline |
| Absa Group Limited |
| Bank Rakyat |
Absa Group and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and Bank Rakyat
The main advantage of trading using opposite Absa Group and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group 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.| Absa Group vs. Piraeus Bank SA | Absa Group vs. Turkiye Garanti Bankasi | Absa Group vs. Uwharrie Capital Corp |
| Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Turkiye Garanti Bankasi | Bank Rakyat vs. Uwharrie Capital Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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