Correlation Between Bank Rakyat and Citizens Bancorp

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

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

Diversification Opportunities for Bank Rakyat and Citizens Bancorp

-0.65

Correlation Coefficient

Bank Rakyat  Citizens Bancorp

Excellent diversification

The 3 months correlation between Bank and Citizens is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Citizens Bancorp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citizens Bancorp 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 Citizens Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citizens Bancorp has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Citizens Bancorp go up and down completely randomly.

Pair Corralation between Bank Rakyat and Citizens Bancorp

Assuming the 90 days horizon Bank Rakyat is expected to generate 51.45 times less return on investment than Citizens Bancorp. But when comparing it to its historical volatility, Bank Rakyat is 1.83 times less risky than Citizens Bancorp. It trades about 0.0 of its potential returns per unit of risk. Citizens Bancorp of is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,975  in Citizens Bancorp of on September 3, 2024 and sell it today you would earn a total of  125.00  from holding Citizens Bancorp of or generate 4.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.41%
Values	Daily Returns

Bank Rakyat  vs.  Citizens Bancorp of

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.

Citizens Bancorp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Citizens Bancorp of are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental drivers, Citizens Bancorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Rakyat and Citizens Bancorp

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

The idea behind Bank Rakyat and Citizens Bancorp of 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.