Correlation Between Bank Rakyat and Eco (Atlantic)
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Eco (Atlantic) 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 Eco (Atlantic) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Eco Oil Gas, you can compare the effects of market volatilities on Bank Rakyat and Eco (Atlantic) 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 Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Eco (Atlantic).
Diversification Opportunities for Bank Rakyat and Eco (Atlantic)
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Eco is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco (Atlantic) 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 Eco (Atlantic). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco (Atlantic) has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Eco (Atlantic) go up and down completely randomly.
Pair Corralation between Bank Rakyat and Eco (Atlantic)
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Eco (Atlantic). But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 4.57 times less risky than Eco (Atlantic). The pink sheet trades about -0.01 of its potential returns per unit of risk. The Eco Oil Gas is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Eco Oil Gas on September 1, 2024 and sell it today you would lose (3.00) from holding Eco Oil Gas or give up 20.0% 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. Eco Oil Gas
Performance |
| Timeline |
| Bank Rakyat |
| Eco (Atlantic) |
Bank Rakyat and Eco (Atlantic) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Eco (Atlantic)
The main advantage of trading using opposite Bank Rakyat and Eco (Atlantic) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Eco (Atlantic) 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 Eco (Atlantic) will offset losses from the drop in Eco (Atlantic)'s long position.| Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Turkiye Garanti Bankasi | Bank Rakyat vs. Delhi Bank Corp | Bank Rakyat vs. Uwharrie Capital Corp |
| Eco (Atlantic) vs. CGX Energy | Eco (Atlantic) vs. Frontera Energy Corp | Eco (Atlantic) vs. Africa Energy Corp | Eco (Atlantic) vs. Africa Oil 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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