Correlation Between BANK RAKYAT and Grenke AG

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

Diversification Opportunities for BANK RAKYAT and Grenke AG

0.76
  Correlation Coefficient

Poor diversification

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

Pair Corralation between BANK RAKYAT and Grenke AG

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to generate 1.02 times more return on investment than Grenke AG. However, BANK RAKYAT is 1.02 times more volatile than Grenke AG. It trades about -0.08 of its potential returns per unit of risk. Grenke AG is currently generating about -0.2 per unit of risk. If you would invest  25.00  in BANK RAKYAT IND on September 13, 2024 and sell it today you would lose (1.00) from holding BANK RAKYAT IND or give up 4.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

BANK RAKYAT IND  vs.  Grenke AG

 Performance 
       Timeline  
BANK RAKYAT IND 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BANK RAKYAT IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Grenke AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Grenke AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BANK RAKYAT and Grenke AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BANK RAKYAT and Grenke AG

The main advantage of trading using opposite BANK RAKYAT and Grenke AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Grenke AG 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 Grenke AG will offset losses from the drop in Grenke AG's long position.
The idea behind BANK RAKYAT IND and Grenke AG 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.
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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