Correlation Between Bank Rakyat and Alternet Systems

Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Alternet Systems 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 Alternet Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Rakyat and Alternet Systems, you can compare the effects of market volatilities on Bank Rakyat and Alternet Systems 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 Alternet Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Alternet Systems.

Diversification Opportunities for Bank Rakyat and Alternet Systems

-0.39

Correlation Coefficient

Bank Rakyat  Alternet Systems

Very good diversification

The 3 months correlation between Bank and Alternet is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Alternet Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternet Systems 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 Alternet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternet Systems has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Alternet Systems go up and down completely randomly.

Pair Corralation between Bank Rakyat and Alternet Systems

Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Alternet Systems. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 19.66 times less risky than Alternet Systems. The pink sheet trades about -0.18 of its potential returns per unit of risk. The Alternet Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Alternet Systems on September 1, 2024 and sell it today you would earn a total of  0.01  from holding Alternet Systems or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Bank Rakyat  vs.  Alternet Systems

Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Rakyat 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 signals remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Alternet Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alternet Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Alternet Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Rakyat and Alternet Systems

The main advantage of trading using opposite Bank Rakyat and Alternet Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Alternet Systems 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 Alternet Systems will offset losses from the drop in Alternet Systems' long position.

The idea behind Bank Rakyat and Alternet Systems 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.