Correlation Between Bank Rakyat and BASE
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and BASE 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 BASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and BASE Inc, you can compare the effects of market volatilities on Bank Rakyat and BASE 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 BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and BASE.
Diversification Opportunities for Bank Rakyat and BASE
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and BASE is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc 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 BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and BASE go up and down completely randomly.
Pair Corralation between Bank Rakyat and BASE
Assuming the 90 days horizon Bank Rakyat is expected to generate 5.0 times more return on investment than BASE. However, Bank Rakyat is 5.0 times more volatile than BASE Inc. It trades about 0.01 of its potential returns per unit of risk. BASE Inc is currently generating about -0.22 per unit of risk. If you would invest 1,280 in Bank Rakyat on November 2, 2024 and sell it today you would lose (4.00) from holding Bank Rakyat or give up 0.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Bank Rakyat vs. BASE Inc
Performance |
| Timeline |
| Bank Rakyat |
| BASE Inc |
Bank Rakyat and BASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and BASE
The main advantage of trading using opposite Bank Rakyat and BASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, BASE 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 BASE will offset losses from the drop in BASE's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Auddia Inc | BASE vs. Maxwell Resource |
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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