Correlation Between Nasdaq and Bank Rakyat

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Can any of the company-specific risk be diversified away by investing in both Nasdaq 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 Nasdaq and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Bank Rakyat, you can compare the effects of market volatilities on Nasdaq 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 Nasdaq with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Bank Rakyat.

Diversification Opportunities for Nasdaq and Bank Rakyat

-0.82
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Nasdaq and Bank is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Nasdaq 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 Nasdaq Inc 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 has no effect on the direction of Nasdaq i.e., Nasdaq and Bank Rakyat go up and down completely randomly.

Pair Corralation between Nasdaq and Bank Rakyat

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.57 times more return on investment than Bank Rakyat. However, Nasdaq Inc is 1.75 times less risky than Bank Rakyat. It trades about 0.25 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.18 per unit of risk. If you would invest  7,115  in Nasdaq Inc on September 1, 2024 and sell it today you would earn a total of  1,184  from holding Nasdaq Inc or generate 16.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nasdaq Inc  vs.  Bank Rakyat

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq reported solid returns over the last few months and may actually be approaching a breakup point.
Bank Rakyat 

Risk-Adjusted Performance

0 of 100

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

Nasdaq and Bank Rakyat Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Bank Rakyat

The main advantage of trading using opposite Nasdaq and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Bank Rakyat 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.
Check out your portfolio center.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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