Correlation Between Bank Rakyat and Close Brothers
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Close Brothers 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 Close Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Close Brothers Group, you can compare the effects of market volatilities on Bank Rakyat and Close Brothers 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 Close Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Close Brothers.
Diversification Opportunities for Bank Rakyat and Close Brothers
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Close is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Close Brothers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Close Brothers 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 Close Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Close Brothers Group has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Close Brothers go up and down completely randomly.
Pair Corralation between Bank Rakyat and Close Brothers
Assuming the 90 days horizon Bank Rakyat is expected to generate 0.36 times more return on investment than Close Brothers. However, Bank Rakyat is 2.82 times less risky than Close Brothers. It trades about -0.17 of its potential returns per unit of risk. Close Brothers Group is currently generating about -0.23 per unit of risk. If you would invest 1,653 in Bank Rakyat on September 2, 2024 and sell it today you would lose (307.00) from holding Bank Rakyat or give up 18.57% 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. Close Brothers Group
Performance |
| Timeline |
| Bank Rakyat |
| Close Brothers Group |
Bank Rakyat and Close Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Close Brothers
The main advantage of trading using opposite Bank Rakyat and Close Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Close Brothers 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 Close Brothers will offset losses from the drop in Close Brothers' long position.| Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Turkiye Garanti Bankasi | Bank Rakyat vs. Uwharrie Capital Corp |
| Close Brothers vs. Morgan Stanley | Close Brothers vs. Goldman Sachs Group | Close Brothers vs. HUMANA INC | Close Brothers vs. SCOR PK |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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