Correlation Between Bank Rakyat and Dimeco
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Dimeco 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 Dimeco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Dimeco Inc, you can compare the effects of market volatilities on Bank Rakyat and Dimeco 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 Dimeco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Dimeco.
Diversification Opportunities for Bank Rakyat and Dimeco
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Dimeco is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Dimeco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimeco 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 Dimeco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimeco Inc has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Dimeco go up and down completely randomly.
Pair Corralation between Bank Rakyat and Dimeco
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Dimeco. In addition to that, Bank Rakyat is 2.72 times more volatile than Dimeco Inc. It trades about -0.28 of its total potential returns per unit of risk. Dimeco Inc is currently generating about -0.34 per unit of volatility. If you would invest 4,085 in Dimeco Inc on November 28, 2024 and sell it today you would lose (224.00) from holding Dimeco Inc or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Dimeco Inc
Performance |
| Timeline |
| Bank Rakyat |
| Dimeco Inc |
Bank Rakyat and Dimeco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Dimeco
The main advantage of trading using opposite Bank Rakyat and Dimeco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Dimeco 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 Dimeco will offset losses from the drop in Dimeco'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 |
| Dimeco vs. Absa Group Limited | Dimeco vs. Aozora Bank Ltd | Dimeco vs. Fidelity DD Bancorp | Dimeco vs. Chemung Financial Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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