Correlation Between Bank Rakyat and Crimson Wine
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Crimson Wine 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 Crimson Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Crimson Wine, you can compare the effects of market volatilities on Bank Rakyat and Crimson Wine 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 Crimson Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Crimson Wine.
Diversification Opportunities for Bank Rakyat and Crimson Wine
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Crimson is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Crimson Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crimson Wine 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 Crimson Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crimson Wine has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Crimson Wine go up and down completely randomly.
Pair Corralation between Bank Rakyat and Crimson Wine
Assuming the 90 days horizon Bank Rakyat is expected to generate 1.3 times less return on investment than Crimson Wine. In addition to that, Bank Rakyat is 1.01 times more volatile than Crimson Wine. It trades about 0.01 of its total potential returns per unit of risk. Crimson Wine is currently generating about 0.02 per unit of volatility. If you would invest 600.00 in Crimson Wine on August 28, 2024 and sell it today you would earn a total of 55.00 from holding Crimson Wine or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Crimson Wine
Performance |
| Timeline |
| Bank Rakyat |
| Crimson Wine |
Bank Rakyat and Crimson Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Crimson Wine
The main advantage of trading using opposite Bank Rakyat and Crimson Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Crimson Wine 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 Crimson Wine will offset losses from the drop in Crimson Wine's long position.The idea behind Bank Rakyat and Crimson Wine 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.| Crimson Wine vs. Pernod Ricard SA | Crimson Wine vs. Naked Wines plc | Crimson Wine vs. Willamette Valley Vineyards | Crimson Wine vs. Brown Forman |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |