Correlation Between Bank Rakyat and A1
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and A1 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 A1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and A1 Group, you can compare the effects of market volatilities on Bank Rakyat and A1 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 A1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and A1.
Diversification Opportunities for Bank Rakyat and A1
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and A1 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and A1 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on A1 Group 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 A1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of A1 Group has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and A1 go up and down completely randomly.
Pair Corralation between Bank Rakyat and A1
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the A1. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 7.69 times less risky than A1. The pink sheet trades about -0.04 of its potential returns per unit of risk. The A1 Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1.68 in A1 Group on September 12, 2024 and sell it today you would lose (1.47) from holding A1 Group or give up 87.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. A1 Group
Performance |
| Timeline |
| Bank Rakyat |
| A1 Group |
Bank Rakyat and A1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and A1
The main advantage of trading using opposite Bank Rakyat and A1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, A1 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 A1 will offset losses from the drop in A1's long position.| Bank Rakyat vs. PT Bank Rakyat | Bank Rakyat vs. Morningstar Unconstrained Allocation | Bank Rakyat vs. Bondbloxx ETF Trust | Bank Rakyat vs. Spring Valley Acquisition |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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