Correlation Between Bank Rakyat and Payfare
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Payfare 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 Payfare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Payfare, you can compare the effects of market volatilities on Bank Rakyat and Payfare 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 Payfare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Payfare.
Diversification Opportunities for Bank Rakyat and Payfare
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Payfare is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare 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 Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Payfare go up and down completely randomly.
Pair Corralation between Bank Rakyat and Payfare
Assuming the 90 days horizon Bank Rakyat is expected to generate 0.18 times more return on investment than Payfare. However, Bank Rakyat is 5.66 times less risky than Payfare. It trades about -0.17 of its potential returns per unit of risk. Payfare is currently generating about -0.12 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Payfare
Performance |
| Timeline |
| Bank Rakyat |
| Payfare |
Bank Rakyat and Payfare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Payfare
The main advantage of trading using opposite Bank Rakyat and Payfare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Payfare 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 Payfare will offset losses from the drop in Payfare's long position.| Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Turkiye Garanti Bankasi | Bank Rakyat vs. Uwharrie Capital Corp |
| Payfare vs. Priority Technology Holdings | Payfare vs. Repay Holdings Corp | Payfare vs. Radware | Payfare vs. Global Blue Group |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |