Correlation Between Bank Rakyat and Zencash Investment
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Zencash Investment 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 Zencash Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Zencash Investment Trust, you can compare the effects of market volatilities on Bank Rakyat and Zencash Investment 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 Zencash Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Zencash Investment.
Diversification Opportunities for Bank Rakyat and Zencash Investment
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Zencash is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Zencash Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zencash Investment Trust 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 Zencash Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zencash Investment Trust has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Zencash Investment go up and down completely randomly.
Pair Corralation between Bank Rakyat and Zencash Investment
Assuming the 90 days horizon Bank Rakyat is expected to generate 0.44 times more return on investment than Zencash Investment. However, Bank Rakyat is 2.29 times less risky than Zencash Investment. It trades about 0.06 of its potential returns per unit of risk. Zencash Investment Trust is currently generating about -0.33 per unit of risk. If you would invest 1,266 in Bank Rakyat on November 5, 2024 and sell it today you would earn a total of 29.00 from holding Bank Rakyat or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Zencash Investment Trust
Performance |
| Timeline |
| Bank Rakyat |
| Zencash Investment Trust |
Bank Rakyat and Zencash Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Zencash Investment
The main advantage of trading using opposite Bank Rakyat and Zencash Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Zencash Investment 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 Zencash Investment will offset losses from the drop in Zencash Investment's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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