Correlation Between Standard Bank and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Bank Rakyat 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 Standard Bank and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and Bank Rakyat, you can compare the effects of market volatilities on Standard Bank and Bank Rakyat 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 Standard Bank with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Bank Rakyat.
Diversification Opportunities for Standard Bank and Bank Rakyat
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Standard and Bank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Standard Bank 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 Standard Bank Group are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat has no effect on the direction of Standard Bank i.e., Standard Bank and Bank Rakyat go up and down completely randomly.
Pair Corralation between Standard Bank and Bank Rakyat
Assuming the 90 days horizon Standard Bank Group is expected to generate 1.13 times more return on investment than Bank Rakyat. However, Standard Bank is 1.13 times more volatile than Bank Rakyat. It trades about 0.07 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.04 per unit of risk. If you would invest 990.00 in Standard Bank Group on August 24, 2024 and sell it today you would earn a total of 366.00 from holding Standard Bank Group or generate 36.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Standard Bank Group vs. Bank Rakyat
Performance |
| Timeline |
| Standard Bank Group |
| Bank Rakyat |
Standard Bank and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Bank Rakyat
The main advantage of trading using opposite Standard Bank and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
| Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group | Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. PSB Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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