Correlation Between Bank Rakyat and Green Star

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

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

Diversification Opportunities for Bank Rakyat and Green Star

-0.6

Correlation Coefficient

Bank Rakyat  Green Star

Excellent diversification

The 3 months correlation between Bank and Green is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Green Star Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Star Products 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 Green Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Star Products has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Green Star go up and down completely randomly.

Pair Corralation between Bank Rakyat and Green Star

Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Green Star. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 8.79 times less risky than Green Star. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Green Star Products is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.07  in Green Star Products on September 13, 2024 and sell it today you would earn a total of  0.03  from holding Green Star Products or generate 42.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bank Rakyat  vs.  Green Star Products

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.

Green Star Products

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green Star Products are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Green Star demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Rakyat and Green Star

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

The idea behind Bank Rakyat and Green Star Products 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.