Correlation Between Bank Rakyat and Argo Gold
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Argo Gold 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 Rakyat and Argo Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Argo Gold, you can compare the effects of market volatilities on Bank Rakyat and Argo Gold 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 Rakyat with a short position of Argo Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Argo Gold.
Diversification Opportunities for Bank Rakyat and Argo Gold
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Argo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Argo Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Gold and Bank Rakyat 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 Rakyat are associated (or correlated) with Argo Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Gold has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Argo Gold go up and down completely randomly.
Pair Corralation between Bank Rakyat and Argo Gold
Assuming the 90 days horizon Bank Rakyat is expected to generate 1.25 times less return on investment than Argo Gold. But when comparing it to its historical volatility, Bank Rakyat is 3.51 times less risky than Argo Gold. It trades about 0.01 of its potential returns per unit of risk. Argo Gold is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Argo Gold on August 26, 2024 and sell it today you would lose (5.50) from holding Argo Gold or give up 55.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Argo Gold
Performance |
| Timeline |
| Bank Rakyat |
| Argo Gold |
Bank Rakyat and Argo Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Argo Gold
The main advantage of trading using opposite Bank Rakyat and Argo Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Argo Gold 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 Argo Gold will offset losses from the drop in Argo Gold's long position.| Bank Rakyat vs. Standard Bank Group | Bank Rakyat vs. PSB Holdings | Bank Rakyat vs. United Overseas Bank | Bank Rakyat vs. Turkiye Garanti Bankasi |
| Argo Gold vs. Aurion Resources | Argo Gold vs. Liberty Gold Corp | Argo Gold vs. Rio2 Limited | Argo Gold vs. Orezone Gold 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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