Correlation Between Bank Rakyat and Chavant Capital

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

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

Diversification Opportunities for Bank Rakyat and Chavant Capital

0.62

Correlation Coefficient

Bank Rakyat  Chavant Capital

Poor diversification

The 3 months correlation between Bank and Chavant is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Chavant Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chavant Capital Acqu 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 Chavant Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chavant Capital Acqu has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Chavant Capital go up and down completely randomly.

Pair Corralation between Bank Rakyat and Chavant Capital

Assuming the 90 days horizon Bank Rakyat is expected to generate 88.99 times less return on investment than Chavant Capital. But when comparing it to its historical volatility, Bank Rakyat is 11.77 times less risky than Chavant Capital. It trades about 0.01 of its potential returns per unit of risk. Chavant Capital Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9.86  in Chavant Capital Acquisition on September 13, 2024 and sell it today you would lose (5.60) from holding Chavant Capital Acquisition or give up 56.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	17.41%
Values	Daily Returns

Bank Rakyat  vs.  Chavant Capital Acquisition

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 weak 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.

Chavant Capital Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chavant Capital Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chavant Capital is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bank Rakyat and Chavant Capital

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

The idea behind Bank Rakyat and Chavant Capital Acquisition 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.