Correlation Between Bank Rakyat and Coloplast
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Coloplast 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 Coloplast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Coloplast A, you can compare the effects of market volatilities on Bank Rakyat and Coloplast 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 Coloplast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Coloplast.
Diversification Opportunities for Bank Rakyat and Coloplast
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Coloplast is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Coloplast A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coloplast A 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 Coloplast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coloplast A has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Coloplast go up and down completely randomly.
Pair Corralation between Bank Rakyat and Coloplast
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Coloplast. In addition to that, Bank Rakyat is 1.14 times more volatile than Coloplast A. It trades about -0.2 of its total potential returns per unit of risk. Coloplast A is currently generating about 0.04 per unit of volatility. If you would invest 1,275 in Coloplast A on August 31, 2024 and sell it today you would earn a total of 14.00 from holding Coloplast A or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Coloplast A
Performance |
| Timeline |
| Bank Rakyat |
| Coloplast A |
Bank Rakyat and Coloplast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Coloplast
The main advantage of trading using opposite Bank Rakyat and Coloplast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Coloplast 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 Coloplast will offset losses from the drop in Coloplast's long position.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Kasikornbank Public Co |
| Coloplast vs. Straumann Holding AG | Coloplast vs. Hoya Corp | Coloplast vs. EssilorLuxottica Socit anonyme | Coloplast vs. Essilor International SA |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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