Correlation Between Bank Rakyat and RMG Acquisition
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and RMG Acquisition 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 RMG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and RMG Acquisition Corp, you can compare the effects of market volatilities on Bank Rakyat and RMG Acquisition 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 RMG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and RMG Acquisition.
Diversification Opportunities for Bank Rakyat and RMG Acquisition
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and RMG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and RMG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMG Acquisition Corp 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 RMG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMG Acquisition Corp has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and RMG Acquisition go up and down completely randomly.
Pair Corralation between Bank Rakyat and RMG Acquisition
Assuming the 90 days horizon Bank Rakyat is expected to generate 2.44 times more return on investment than RMG Acquisition. However, Bank Rakyat is 2.44 times more volatile than RMG Acquisition Corp. It trades about 0.0 of its potential returns per unit of risk. RMG Acquisition Corp is currently generating about -0.01 per unit of risk. If you would invest 1,434 in Bank Rakyat on September 3, 2024 and sell it today you would lose (88.00) from holding Bank Rakyat or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.31% |
| Values | Daily Returns |
Bank Rakyat vs. RMG Acquisition Corp
Performance |
| Timeline |
| Bank Rakyat |
| RMG Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank Rakyat and RMG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and RMG Acquisition
The main advantage of trading using opposite Bank Rakyat and RMG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, RMG Acquisition 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 RMG Acquisition will offset losses from the drop in RMG Acquisition'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 |
| RMG Acquisition vs. Hudson Acquisition I | RMG Acquisition vs. Alpha One | RMG Acquisition vs. Manaris Corp | RMG Acquisition vs. Marblegate Acquisition 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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