Correlation Between Bank Rakyat and Bayan Resources
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Bayan Resources 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 Bayan Resources 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 Bayan Resources Tbk, you can compare the effects of market volatilities on Bank Rakyat and Bayan Resources 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 Bayan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Bayan Resources.
Diversification Opportunities for Bank Rakyat and Bayan Resources
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Bayan is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Bayan Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayan Resources Tbk 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 Bayan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayan Resources Tbk has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Bayan Resources go up and down completely randomly.
Pair Corralation between Bank Rakyat and Bayan Resources
Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the Bayan Resources. In addition to that, Bank Rakyat is 1.26 times more volatile than Bayan Resources Tbk. It trades about -0.16 of its total potential returns per unit of risk. Bayan Resources Tbk is currently generating about 0.38 per unit of volatility. If you would invest 1,717,500 in Bayan Resources Tbk on August 27, 2024 and sell it today you would earn a total of 180,000 from holding Bayan Resources Tbk or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Bayan Resources Tbk
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Bayan Resources Tbk |
Bank Rakyat and Bayan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Bayan Resources
The main advantage of trading using opposite Bank Rakyat and Bayan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Bayan Resources 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 Bayan Resources will offset losses from the drop in Bayan Resources' long position.| Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Bank Negara Indonesia | Bank Rakyat vs. Telkom Indonesia Tbk |
| Bayan Resources vs. Indo Tambangraya Megah | Bayan Resources vs. Indika Energy Tbk | Bayan Resources vs. Darma Henwa Tbk | Bayan Resources vs. Harum Energy Tbk |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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