Correlation Between Bank Rakyat and Ovation Science

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

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

Diversification Opportunities for Bank Rakyat and Ovation Science

0.76

Correlation Coefficient

Bank Rakyat  Ovation Science

Poor diversification

The 3 months correlation between Bank and Ovation is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Ovation Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovation Science 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 Ovation Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovation Science has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Ovation Science go up and down completely randomly.

Pair Corralation between Bank Rakyat and Ovation Science

Assuming the 90 days horizon Bank Rakyat is expected to generate 0.2 times more return on investment than Ovation Science. However, Bank Rakyat is 5.01 times less risky than Ovation Science. It trades about -0.23 of its potential returns per unit of risk. Ovation Science is currently generating about -0.17 per unit of risk. If you would invest  1,719  in Bank Rakyat on September 17, 2024 and sell it today you would lose (420.00) from holding Bank Rakyat or give up 24.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Bank Rakyat  vs.  Ovation Science

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.

Ovation Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ovation Science has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bank Rakyat and Ovation Science

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

The idea behind Bank Rakyat and Ovation Science 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.