Correlation Between BANK RAKYAT and IA FINANCIAL

Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and IA FINANCIAL 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 IA FINANCIAL 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 IA FINANCIAL P, you can compare the effects of market volatilities on BANK RAKYAT and IA FINANCIAL 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 IA FINANCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and IA FINANCIAL.

Diversification Opportunities for BANK RAKYAT and IA FINANCIAL

-0.75

Correlation Coefficient

BANK RAKYAT  IA FINANCIAL

Pay attention - limited upside

The 3 months correlation between BANK and 1OD is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and IA FINANCIAL P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA FINANCIAL P 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 IA FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA FINANCIAL P has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and IA FINANCIAL go up and down completely randomly.

Pair Corralation between BANK RAKYAT and IA FINANCIAL

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the IA FINANCIAL. In addition to that, BANK RAKYAT is 1.07 times more volatile than IA FINANCIAL P. It trades about -0.19 of its total potential returns per unit of risk. IA FINANCIAL P is currently generating about 0.14 per unit of volatility. If you would invest  7,128  in IA FINANCIAL P on September 23, 2024 and sell it today you would earn a total of  1,472  from holding IA FINANCIAL P or generate 20.65% 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.  IA FINANCIAL P

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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

IA FINANCIAL P

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IA FINANCIAL P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IA FINANCIAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and IA FINANCIAL

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

The idea behind BANK RAKYAT IND and IA FINANCIAL P 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.