Correlation Between CVB Financial and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both CVB Financial and BANK RAKYAT 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 CVB Financial and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVB Financial Corp and BANK RAKYAT IND, you can compare the effects of market volatilities on CVB Financial and BANK RAKYAT 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 CVB Financial with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVB Financial and BANK RAKYAT.
Diversification Opportunities for CVB Financial and BANK RAKYAT
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CVB and BANK is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding CVB Financial Corp and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND and CVB Financial 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 CVB Financial Corp are associated (or correlated) with BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of CVB Financial i.e., CVB Financial and BANK RAKYAT go up and down completely randomly.
Pair Corralation between CVB Financial and BANK RAKYAT
Assuming the 90 days horizon CVB Financial Corp is expected to under-perform the BANK RAKYAT. But the stock apears to be less risky and, when comparing its historical volatility, CVB Financial Corp is 1.23 times less risky than BANK RAKYAT. The stock trades about -0.17 of its potential returns per unit of risk. The BANK RAKYAT IND is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 24.00 in BANK RAKYAT IND on October 11, 2024 and sell it today you would lose (1.00) from holding BANK RAKYAT IND or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVB Financial Corp vs. BANK RAKYAT IND
Performance |
| Timeline |
| CVB Financial Corp |
| BANK RAKYAT IND |
CVB Financial and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVB Financial and BANK RAKYAT
The main advantage of trading using opposite CVB Financial and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVB Financial position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| CVB Financial vs. Webster Financial | CVB Financial vs. Erste Group Bank | CVB Financial vs. Discover Financial Services | CVB Financial vs. Tower Semiconductor |
| BANK RAKYAT vs. Plastic Omnium | BANK RAKYAT vs. Heidelberg Materials AG | BANK RAKYAT vs. CVB Financial Corp | BANK RAKYAT vs. Mitsubishi Materials |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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