Correlation Between Bank Rakyat and Cashmere Valley
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Cashmere Valley 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 Cashmere Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Cashmere Valley Bank, you can compare the effects of market volatilities on Bank Rakyat and Cashmere Valley 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 Cashmere Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Cashmere Valley.
Diversification Opportunities for Bank Rakyat and Cashmere Valley
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Cashmere is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Cashmere Valley Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cashmere Valley Bank 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 Cashmere Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cashmere Valley Bank has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Cashmere Valley go up and down completely randomly.
Pair Corralation between Bank Rakyat and Cashmere Valley
Assuming the 90 days horizon Bank Rakyat is expected to generate 5.34 times less return on investment than Cashmere Valley. But when comparing it to its historical volatility, Bank Rakyat is 1.55 times less risky than Cashmere Valley. It trades about 0.01 of its potential returns per unit of risk. Cashmere Valley Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,342 in Cashmere Valley Bank on August 31, 2024 and sell it today you would earn a total of 1,558 from holding Cashmere Valley Bank or generate 35.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 88.28% |
| Values | Daily Returns |
Bank Rakyat vs. Cashmere Valley Bank
Performance |
| Timeline |
| Bank Rakyat |
| Cashmere Valley Bank |
Bank Rakyat and Cashmere Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Cashmere Valley
The main advantage of trading using opposite Bank Rakyat and Cashmere Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Cashmere Valley 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 Cashmere Valley will offset losses from the drop in Cashmere Valley'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 |
| Cashmere Valley vs. Santa Cruz County | Cashmere Valley vs. Montfort Capital Corp | Cashmere Valley vs. Mullen Group | Cashmere Valley vs. Cartier Resources |
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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