Correlation Between Natural Health and BANK RAKYAT

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

By analyzing existing cross correlation between Natural Health Trends and BANK RAKYAT IND, you can compare the effects of market volatilities on Natural Health and BANK RAKYAT 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 Natural Health with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and BANK RAKYAT.

Diversification Opportunities for Natural Health and BANK RAKYAT

0.47

Correlation Coefficient

Natural Health  BANK RAKYAT

Very weak diversification

The 3 months correlation between Natural and BANK is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND and Natural Health 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 Natural Health Trends are associated (or correlated) with BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Natural Health i.e., Natural Health and BANK RAKYAT go up and down completely randomly.

Pair Corralation between Natural Health and BANK RAKYAT

Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the BANK RAKYAT. In addition to that, Natural Health is 1.19 times more volatile than BANK RAKYAT IND. It trades about -0.19 of its total potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.19 per unit of volatility. If you would invest  33.00  in BANK RAKYAT IND on September 17, 2024 and sell it today you would lose (9.00) from holding BANK RAKYAT IND or give up 27.27% of portfolio value over 90 days.

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

Natural Health Trends  vs.  BANK RAKYAT IND

Natural Health Trends

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Natural Health Trends has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

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 unsteady 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.

Pair Trading with Natural Health and BANK RAKYAT

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

The idea behind Natural Health Trends and BANK RAKYAT IND 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.