Correlation Between CITIC Telecom and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both CITIC Telecom 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 CITIC Telecom and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITIC Telecom International and BANK RAKYAT IND, you can compare the effects of market volatilities on CITIC Telecom 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 CITIC Telecom with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITIC Telecom and BANK RAKYAT.
Diversification Opportunities for CITIC Telecom and BANK RAKYAT
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between CITIC and BANK is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CITIC Telecom International and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND and CITIC Telecom 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 CITIC Telecom International 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 IND has no effect on the direction of CITIC Telecom i.e., CITIC Telecom and BANK RAKYAT go up and down completely randomly.
Pair Corralation between CITIC Telecom and BANK RAKYAT
Assuming the 90 days horizon CITIC Telecom International is expected to generate 4.69 times more return on investment than BANK RAKYAT. However, CITIC Telecom is 4.69 times more volatile than BANK RAKYAT IND. It trades about 0.07 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.06 per unit of risk. If you would invest 9.96 in CITIC Telecom International on November 3, 2024 and sell it today you would earn a total of 16.04 from holding CITIC Telecom International or generate 161.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITIC Telecom International vs. BANK RAKYAT IND
Performance |
| Timeline |
| CITIC Telecom Intern |
| BANK RAKYAT IND |
CITIC Telecom and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITIC Telecom and BANK RAKYAT
The main advantage of trading using opposite CITIC Telecom and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITIC Telecom 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.| CITIC Telecom vs. EIDESVIK OFFSHORE NK | CITIC Telecom vs. BW OFFSHORE LTD | CITIC Telecom vs. ANGLO ASIAN MINING | CITIC Telecom vs. INSURANCE AUST GRP |
| BANK RAKYAT vs. MOUNT GIBSON IRON | BANK RAKYAT vs. The Japan Steel | BANK RAKYAT vs. WESANA HEALTH HOLD | BANK RAKYAT vs. DENTSPLY SIRONA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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