Correlation Between Bank Rakyat and Bank Net
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Bank Net 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 Bank Net 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 Bank Net Indonesia, you can compare the effects of market volatilities on Bank Rakyat and Bank Net 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 Bank Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Bank Net.
Diversification Opportunities for Bank Rakyat and Bank Net
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Bank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Bank Net Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Net Indonesia 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 Bank Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Net Indonesia has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Bank Net go up and down completely randomly.
Pair Corralation between Bank Rakyat and Bank Net
Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to generate 1.81 times more return on investment than Bank Net. However, Bank Rakyat is 1.81 times more volatile than Bank Net Indonesia. It trades about 0.01 of its potential returns per unit of risk. Bank Net Indonesia is currently generating about -0.04 per unit of risk. If you would invest 22,600 in Bank Rakyat Indonesia on November 3, 2024 and sell it today you would lose (400.00) from holding Bank Rakyat Indonesia or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Bank Net Indonesia
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Bank Net Indonesia |
Bank Rakyat and Bank Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Bank Net
The main advantage of trading using opposite Bank Rakyat and Bank Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Bank Net 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 Net will offset losses from the drop in Bank Net's long position.| Bank Rakyat vs. Bank Bukopin Tbk | Bank Rakyat vs. Bank BRISyariah Tbk | Bank Rakyat vs. Bank Tabungan Negara | Bank Rakyat vs. Bank Artos Indonesia |
| Bank Net vs. Bank Artos Indonesia | Bank Net vs. Bank Yudha Bhakti | Bank Net vs. Bk Harda Internasional | Bank Net vs. Bank Rakyat Indonesia |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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