Correlation Between BANK RAKYAT and Element Solutions

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Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on BANK RAKYAT and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Element Solutions.

Diversification Opportunities for BANK RAKYAT and Element Solutions

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between BANK and Element is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Element Solutions go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Element Solutions

If you would invest  0.00  in Element Solutions on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Element Solutions or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.76%
ValuesDaily Returns

BANK RAKYAT IND  vs.  Element Solutions

 Performance 
       Timeline  
BANK RAKYAT IND 

Risk-Adjusted Performance

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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.
Element Solutions 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Element Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Element Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BANK RAKYAT and Element Solutions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BANK RAKYAT and Element Solutions

The main advantage of trading using opposite BANK RAKYAT and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.
The idea behind BANK RAKYAT IND and Element Solutions 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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