Correlation Between Bank Rakyat and Gold Road

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

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

Diversification Opportunities for Bank Rakyat and Gold Road

-0.46

Correlation Coefficient

Bank Rakyat  Gold Road

Very good diversification

The 3 months correlation between Bank and Gold is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Gold Road go up and down completely randomly.

Pair Corralation between Bank Rakyat and Gold Road

If you would invest  0.00  in Gold Road Resources on January 31, 2024 and sell it today you would earn a total of  0.00  from holding Gold Road Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	2.38%
Values	Daily Returns

Bank Rakyat  vs.  Gold Road Resources

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 conflicting performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Gold Road Resources

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Gold Road Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak primary indicators, Gold Road may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Bank Rakyat and Gold Road

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

The idea behind Bank Rakyat and Gold Road Resources 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.