Correlation Between Bank Rakyat and First National
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and First National 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 First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and First National Energy, you can compare the effects of market volatilities on Bank Rakyat and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and First National.
Diversification Opportunities for Bank Rakyat and First National
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and First National go up and down completely randomly.
Pair Corralation between Bank Rakyat and First National
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the First National. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 63.62 times less risky than First National. The pink sheet trades about -0.03 of its potential returns per unit of risk. The First National Energy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 55.00 in First National Energy on August 31, 2024 and sell it today you would lose (45.94) from holding First National Energy or give up 83.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Bank Rakyat vs. First National Energy
Performance |
| Timeline |
| Bank Rakyat |
| First National Energy |
Bank Rakyat and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and First National
The main advantage of trading using opposite Bank Rakyat and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Kasikornbank Public Co |
| First National vs. Kontrol Technologies Corp | First National vs. PwrCor Inc | First National vs. 808 Renewable Energy | First National vs. Boralex |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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