Correlation Between Bank Rakyat and Supreme Cable
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Supreme Cable 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 Supreme Cable 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 Supreme Cable Manufacturing, you can compare the effects of market volatilities on Bank Rakyat and Supreme Cable 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 Supreme Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Supreme Cable.
Diversification Opportunities for Bank Rakyat and Supreme Cable
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Supreme is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Supreme Cable Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supreme Cable Manufa 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 Supreme Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supreme Cable Manufa has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Supreme Cable go up and down completely randomly.
Pair Corralation between Bank Rakyat and Supreme Cable
Assuming the 90 days trading horizon Bank Rakyat is expected to generate 133.77 times less return on investment than Supreme Cable. But when comparing it to its historical volatility, Bank Rakyat Indonesia is 29.81 times less risky than Supreme Cable. It trades about 0.01 of its potential returns per unit of risk. Supreme Cable Manufacturing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 803,535 in Supreme Cable Manufacturing on August 27, 2024 and sell it today you would lose (584,535) from holding Supreme Cable Manufacturing or give up 72.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Supreme Cable Manufacturing
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Supreme Cable Manufa |
Bank Rakyat and Supreme Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Supreme Cable
The main advantage of trading using opposite Bank Rakyat and Supreme Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Supreme Cable 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 Supreme Cable will offset losses from the drop in Supreme Cable'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 |
| Supreme Cable vs. Voksel Electric Tbk | Supreme Cable vs. Kmi Wire And | Supreme Cable vs. Kabelindo Murni Tbk | Supreme Cable vs. Selamat Sempurna 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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