Correlation Between Bank Rakyat and Leyand International
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Leyand International 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 Leyand International 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 Leyand International Tbk, you can compare the effects of market volatilities on Bank Rakyat and Leyand International 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 Leyand International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Leyand International.
Diversification Opportunities for Bank Rakyat and Leyand International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Leyand is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Leyand International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leyand International 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 Leyand International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leyand International Tbk has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Leyand International go up and down completely randomly.
Pair Corralation between Bank Rakyat and Leyand International
Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the Leyand International. But the stock apears to be less risky and, when comparing its historical volatility, Bank Rakyat Indonesia is 4.48 times less risky than Leyand International. The stock trades about -0.02 of its potential returns per unit of risk. The Leyand International Tbk is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Leyand International Tbk on September 1, 2024 and sell it today you would earn a total of 300.00 from holding Leyand International Tbk or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Leyand International Tbk
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Leyand International Tbk |
Bank Rakyat and Leyand International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Leyand International
The main advantage of trading using opposite Bank Rakyat and Leyand International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Leyand International 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 Leyand International will offset losses from the drop in Leyand International's 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 |
| Leyand International vs. Aneka Tambang Persero | Leyand International vs. Bukit Asam Tbk | Leyand International vs. Telkom Indonesia Tbk | Leyand International vs. Astra International 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 CEOs Directory module to screen CEOs from public companies around the world.
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