Correlation Between Bank Rakyat and CBD Global

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

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

Diversification Opportunities for Bank Rakyat and CBD Global

0.63

Correlation Coefficient

Bank Rakyat  CBD Global

Poor diversification

The 3 months correlation between Bank and CBD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and CBD Global Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBD Global Sciences 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 CBD Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBD Global Sciences has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and CBD Global go up and down completely randomly.

Pair Corralation between Bank Rakyat and CBD Global

If you would invest  6.00  in CBD Global Sciences on September 15, 2024 and sell it today you would earn a total of  0.00  from holding CBD Global Sciences or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Bank Rakyat  vs.  CBD Global Sciences

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CBD Global Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bank Rakyat and CBD Global

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

The idea behind Bank Rakyat and CBD Global Sciences 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.