Correlation Between Bank Rakyat and Algoma Central
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Algoma Central 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 Algoma Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Algoma Central, you can compare the effects of market volatilities on Bank Rakyat and Algoma Central 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 Algoma Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Algoma Central.
Diversification Opportunities for Bank Rakyat and Algoma Central
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Algoma is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Algoma Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Central 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 are associated (or correlated) with Algoma Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Central has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Algoma Central go up and down completely randomly.
Pair Corralation between Bank Rakyat and Algoma Central
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Algoma Central. In addition to that, Bank Rakyat is 1.4 times more volatile than Algoma Central. It trades about -0.36 of its total potential returns per unit of risk. Algoma Central is currently generating about -0.16 per unit of volatility. If you would invest 1,138 in Algoma Central on September 1, 2024 and sell it today you would lose (48.00) from holding Algoma Central or give up 4.22% 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 vs. Algoma Central
Performance |
| Timeline |
| Bank Rakyat |
| Algoma Central |
Bank Rakyat and Algoma Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Algoma Central
The main advantage of trading using opposite Bank Rakyat and Algoma Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Algoma Central 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 Algoma Central will offset losses from the drop in Algoma Central's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Kasikornbank Public Co | Bank Rakyat vs. Turkiye Garanti Bankasi |
| Algoma Central vs. Seychelle Environmtl | Algoma Central vs. Energy and Water | Algoma Central vs. One World Universe | Algoma Central vs. Vow ASA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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