Correlation Between Bank Rakyat and Anhui Conch
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Anhui Conch 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 Anhui Conch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Anhui Conch Cement, you can compare the effects of market volatilities on Bank Rakyat and Anhui Conch 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 Anhui Conch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Anhui Conch.
Diversification Opportunities for Bank Rakyat and Anhui Conch
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Anhui is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Anhui Conch Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Conch Cement 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 Anhui Conch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Conch Cement has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Anhui Conch go up and down completely randomly.
Pair Corralation between Bank Rakyat and Anhui Conch
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Anhui Conch. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 2.06 times less risky than Anhui Conch. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Anhui Conch Cement is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 280.00 in Anhui Conch Cement on August 30, 2024 and sell it today you would lose (20.00) from holding Anhui Conch Cement or give up 7.14% 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. Anhui Conch Cement
Performance |
| Timeline |
| Bank Rakyat |
| Anhui Conch Cement |
Bank Rakyat and Anhui Conch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Anhui Conch
The main advantage of trading using opposite Bank Rakyat and Anhui Conch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Anhui Conch 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 Anhui Conch will offset losses from the drop in Anhui Conch's long position.The idea behind Bank Rakyat and Anhui Conch Cement pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Anhui Conch vs. Xinyi Glass Holdings | Anhui Conch vs. CEMATRIX | Anhui Conch vs. CEMEX SAB de | Anhui Conch vs. China National Building |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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