Correlation Between BANK RAKYAT and FIRST SAVINGS

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

Diversification Opportunities for BANK RAKYAT and FIRST SAVINGS

0.69

Correlation Coefficient

BANK RAKYAT  FIRST SAVINGS

Poor diversification

The 3 months correlation between BANK and FIRST is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and FIRST SAVINGS FINL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SAVINGS FINL 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 FIRST SAVINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SAVINGS FINL has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and FIRST SAVINGS go up and down completely randomly.

Pair Corralation between BANK RAKYAT and FIRST SAVINGS

Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 1.86 times less return on investment than FIRST SAVINGS. In addition to that, BANK RAKYAT is 1.16 times more volatile than FIRST SAVINGS FINL. It trades about 0.01 of its total potential returns per unit of risk. FIRST SAVINGS FINL is currently generating about 0.03 per unit of volatility. If you would invest  2,007  in FIRST SAVINGS FINL on April 24, 2025 and sell it today you would earn a total of  53.00  from holding FIRST SAVINGS FINL or generate 2.64% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  FIRST SAVINGS FINL

BANK RAKYAT IND

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BANK RAKYAT IND are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, BANK RAKYAT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

FIRST SAVINGS FINL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FIRST SAVINGS FINL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, FIRST SAVINGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANK RAKYAT and FIRST SAVINGS

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

The idea behind BANK RAKYAT IND and FIRST SAVINGS FINL 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.