Correlation Between Bank Rakyat and B Riley

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

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

Diversification Opportunities for Bank Rakyat and B Riley

-0.79

Correlation Coefficient

Bank Rakyat  B Riley

Pay attention - limited upside

The 3 months correlation between Bank and RILYO is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and B Riley Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Riley Financial 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 B Riley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Riley Financial has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and B Riley go up and down completely randomly.

Pair Corralation between Bank Rakyat and B Riley

Assuming the 90 days horizon Bank Rakyat is expected to generate 2.02 times less return on investment than B Riley. In addition to that, Bank Rakyat is 2.05 times more volatile than B Riley Financial. It trades about 0.01 of its total potential returns per unit of risk. B Riley Financial is currently generating about 0.03 per unit of volatility. If you would invest  2,355  in B Riley Financial on August 31, 2024 and sell it today you would earn a total of  90.00  from holding B Riley Financial or generate 3.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	31.11%
Values	Daily Returns

Bank Rakyat  vs.  B Riley Financial

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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

B Riley Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B Riley Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, B Riley is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bank Rakyat and B Riley

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

The idea behind Bank Rakyat and B Riley Financial 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.