Correlation Between Bank Rakyat and Ateliers Mecaniques

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

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

Diversification Opportunities for Bank Rakyat and Ateliers Mecaniques

-0.13

Correlation Coefficient

Bank Rakyat  Ateliers Mecaniques

Good diversification

The 3 months correlation between Bank and Ateliers is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Ateliers Mecaniques DIndonesie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ateliers Mecaniques 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 Indonesia are associated (or correlated) with Ateliers Mecaniques. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ateliers Mecaniques has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Ateliers Mecaniques go up and down completely randomly.

Pair Corralation between Bank Rakyat and Ateliers Mecaniques

Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the Ateliers Mecaniques. But the stock apears to be less risky and, when comparing its historical volatility, Bank Rakyat Indonesia is 1.14 times less risky than Ateliers Mecaniques. The stock trades about -0.38 of its potential returns per unit of risk. The Ateliers Mecaniques DIndonesie is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  15,100  in Ateliers Mecaniques DIndonesie on February 1, 2024 and sell it today you would earn a total of  200.00  from holding Ateliers Mecaniques DIndonesie or generate 1.32% return on investment over 90 days.

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

Bank Rakyat Indonesia  vs.  Ateliers Mecaniques DIndonesie

Bank Rakyat Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Rakyat Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Ateliers Mecaniques

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ateliers Mecaniques DIndonesie are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Ateliers Mecaniques is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank Rakyat and Ateliers Mecaniques

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

The idea behind Bank Rakyat Indonesia and Ateliers Mecaniques DIndonesie 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.