Correlation Between Boston Beer and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Boston Beer 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 Boston Beer and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Boston Beer and BANK RAKYAT IND, you can compare the effects of market volatilities on Boston Beer 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 Boston Beer with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Boston Beer and BANK RAKYAT.
Diversification Opportunities for Boston Beer and BANK RAKYAT
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Boston and BANK is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding The Boston Beer 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 Boston Beer 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 The Boston Beer 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 Boston Beer i.e., Boston Beer and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Boston Beer and BANK RAKYAT
Assuming the 90 days trading horizon The Boston Beer is expected to under-perform the BANK RAKYAT. But the stock apears to be less risky and, when comparing its historical volatility, The Boston Beer is 1.18 times less risky than BANK RAKYAT. The stock trades about -0.55 of its potential returns per unit of risk. The BANK RAKYAT IND is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 25.00 in BANK RAKYAT IND on November 1, 2024 and sell it today you would lose (1.00) from holding BANK RAKYAT IND or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
The Boston Beer vs. BANK RAKYAT IND
Performance |
| Timeline |
| Boston Beer |
| BANK RAKYAT IND |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Boston Beer and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Boston Beer and BANK RAKYAT
The main advantage of trading using opposite Boston Beer and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boston Beer 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.| Boston Beer vs. Guangdong Investment Limited | Boston Beer vs. DIVERSIFIED ROYALTY | Boston Beer vs. BlueScope Steel Limited | Boston Beer vs. Apollo Investment Corp |
| BANK RAKYAT vs. BANK OF CHINA | BANK RAKYAT vs. Virtu Financial | BANK RAKYAT vs. Ameriprise Financial | BANK RAKYAT vs. UNIQA INSURANCE GR |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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