Correlation Between Bank Rakyat and Kambi Group

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Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Kambi Group 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 Kambi Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Kambi Group plc, you can compare the effects of market volatilities on Bank Rakyat and Kambi Group 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 Kambi Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Kambi Group.

Diversification Opportunities for Bank Rakyat and Kambi Group

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bank and Kambi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Kambi Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kambi Group plc 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 Kambi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kambi Group plc has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Kambi Group go up and down completely randomly.

Pair Corralation between Bank Rakyat and Kambi Group

Assuming the 90 days horizon Bank Rakyat is expected to generate 6.41 times more return on investment than Kambi Group. However, Bank Rakyat is 6.41 times more volatile than Kambi Group plc. It trades about 0.04 of its potential returns per unit of risk. Kambi Group plc is currently generating about 0.22 per unit of risk. If you would invest  1,250  in Bank Rakyat on October 21, 2024 and sell it today you would earn a total of  15.00  from holding Bank Rakyat or generate 1.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.0%
ValuesDaily Returns

Bank Rakyat  vs.  Kambi Group plc

 Performance 
       Timeline  
Bank Rakyat 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Kambi Group plc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kambi Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Bank Rakyat and Kambi Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Rakyat and Kambi Group

The main advantage of trading using opposite Bank Rakyat and Kambi Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Kambi Group 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 Kambi Group will offset losses from the drop in Kambi Group's long position.
The idea behind Bank Rakyat and Kambi Group plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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