Correlation Between Bank Rakyat and J Resources
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and J 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 J 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 J Resources Asia, you can compare the effects of market volatilities on Bank Rakyat and J 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 J Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and J Resources.
Diversification Opportunities for Bank Rakyat and J Resources
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and PSAB is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and J Resources Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Resources Asia 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 J Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Resources Asia has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and J Resources go up and down completely randomly.
Pair Corralation between Bank Rakyat and J Resources
Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the J Resources. But the stock apears to be less risky and, when comparing its historical volatility, Bank Rakyat Indonesia is 2.81 times less risky than J Resources. The stock trades about -0.04 of its potential returns per unit of risk. The J Resources Asia is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 16,100 in J Resources Asia on November 28, 2024 and sell it today you would earn a total of 12,500 from holding J Resources Asia or generate 77.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. J Resources Asia
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| J Resources Asia |
Bank Rakyat and J Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and J Resources
The main advantage of trading using opposite Bank Rakyat and J Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, J 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 J Resources will offset losses from the drop in J 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 |
| J Resources vs. Merdeka Copper Gold | J Resources vs. Golden Eagle Energy | J Resources vs. Rukun Raharja Tbk | J Resources vs. Wilton Makmur 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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