Correlation Between Bank Rakyat and Ristia Bintang
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Ristia Bintang 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 Ristia Bintang 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 Ristia Bintang Mahkotasejati, you can compare the effects of market volatilities on Bank Rakyat and Ristia Bintang 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 Ristia Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Ristia Bintang.
Diversification Opportunities for Bank Rakyat and Ristia Bintang
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Ristia is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Ristia Bintang Mahkotasejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ristia Bintang Mahko 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 Ristia Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ristia Bintang Mahko has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Ristia Bintang go up and down completely randomly.
Pair Corralation between Bank Rakyat and Ristia Bintang
Assuming the 90 days trading horizon Bank Rakyat is expected to generate 2.66 times less return on investment than Ristia Bintang. But when comparing it to its historical volatility, Bank Rakyat Indonesia is 1.01 times less risky than Ristia Bintang. It trades about 0.06 of its potential returns per unit of risk. Ristia Bintang Mahkotasejati is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Ristia Bintang Mahkotasejati on November 4, 2024 and sell it today you would earn a total of 200.00 from holding Ristia Bintang Mahkotasejati or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Ristia Bintang Mahkotasejati
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Ristia Bintang Mahko |
Bank Rakyat and Ristia Bintang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Ristia Bintang
The main advantage of trading using opposite Bank Rakyat and Ristia Bintang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Ristia Bintang 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 Ristia Bintang will offset losses from the drop in Ristia Bintang'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 |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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