Correlation Between Beazer Homes and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Beazer Homes 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 Beazer Homes and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beazer Homes USA and BANK RAKYAT IND, you can compare the effects of market volatilities on Beazer Homes 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 Beazer Homes with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and BANK RAKYAT.
Diversification Opportunities for Beazer Homes and BANK RAKYAT
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Beazer and BANK is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA 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 Beazer Homes 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 Beazer Homes USA 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 Beazer Homes i.e., Beazer Homes and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Beazer Homes and BANK RAKYAT
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 1.61 times more return on investment than BANK RAKYAT. However, Beazer Homes is 1.61 times more volatile than BANK RAKYAT IND. It trades about 0.08 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.01 per unit of risk. If you would invest 1,280 in Beazer Homes USA on September 5, 2024 and sell it today you would earn a total of 2,020 from holding Beazer Homes USA or generate 157.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Beazer Homes USA vs. BANK RAKYAT IND
Performance |
| Timeline |
| Beazer Homes USA |
| BANK RAKYAT IND |
Beazer Homes and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and BANK RAKYAT
The main advantage of trading using opposite Beazer Homes and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes 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.| Beazer Homes vs. PKSHA TECHNOLOGY INC | Beazer Homes vs. SENECA FOODS A | Beazer Homes vs. Astral Foods Limited | Beazer Homes vs. THAI BEVERAGE |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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