Correlation Between BANK RAKYAT and Perma-Fix Environmental

Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Perma-Fix Environmental 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 Perma-Fix Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK RAKYAT IND and Perma Fix Environmental Services, you can compare the effects of market volatilities on BANK RAKYAT and Perma-Fix Environmental 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 Perma-Fix Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Perma-Fix Environmental.

Diversification Opportunities for BANK RAKYAT and Perma-Fix Environmental

-0.79

Correlation Coefficient

BANK RAKYAT  Perma-Fix Environmental

Pay attention - limited upside

The 3 months correlation between BANK and Perma-Fix is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Perma Fix Environmental Servic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perma Fix Environmental 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 IND are associated (or correlated) with Perma-Fix Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perma Fix Environmental has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Perma-Fix Environmental go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Perma-Fix Environmental

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Perma-Fix Environmental. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.67 times less risky than Perma-Fix Environmental. The stock trades about -0.1 of its potential returns per unit of risk. The Perma Fix Environmental Services is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  985.00  in Perma Fix Environmental Services on August 31, 2024 and sell it today you would earn a total of  385.00  from holding Perma Fix Environmental Services or generate 39.09% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  Perma Fix Environmental Servic

BANK RAKYAT IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK RAKYAT IND 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Perma Fix Environmental

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Fix Environmental Services are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Perma-Fix Environmental reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and Perma-Fix Environmental

The main advantage of trading using opposite BANK RAKYAT and Perma-Fix Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Perma-Fix Environmental 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 Perma-Fix Environmental will offset losses from the drop in Perma-Fix Environmental's long position.

The idea behind BANK RAKYAT IND and Perma Fix Environmental Services 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .