Correlation Between Bank Rakyat and China Health
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and China Health 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 China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and China Health Management, you can compare the effects of market volatilities on Bank Rakyat and China Health 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 China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and China Health.
Diversification Opportunities for Bank Rakyat and China Health
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and China is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and China Health Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Management 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 China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Management has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and China Health go up and down completely randomly.
Pair Corralation between Bank Rakyat and China Health
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the China Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 8.64 times less risky than China Health. The pink sheet trades about 0.0 of its potential returns per unit of risk. The China Health Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1.15 in China Health Management on November 2, 2024 and sell it today you would lose (0.81) from holding China Health Management or give up 70.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bank Rakyat vs. China Health Management
Performance |
| Timeline |
| Bank Rakyat |
| China Health Management |
Bank Rakyat and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and China Health
The main advantage of trading using opposite Bank Rakyat and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, China Health 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 China Health will offset losses from the drop in China Health'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 |
| China Health vs. Absolute Health and | China Health vs. Embrace Change Acquisition | China Health vs. Supurva Healthcare Group | China Health vs. TransAKT |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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