Correlation Between Bank Rakyat and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Fast Retailing 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 Fast Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Fast Retailing Co, you can compare the effects of market volatilities on Bank Rakyat and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Fast Retailing.
Diversification Opportunities for Bank Rakyat and Fast Retailing
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Fast is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Fast Retailing go up and down completely randomly.
Pair Corralation between Bank Rakyat and Fast Retailing
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Fast Retailing. In addition to that, Bank Rakyat is 3.01 times more volatile than Fast Retailing Co. It trades about -0.09 of its total potential returns per unit of risk. Fast Retailing Co is currently generating about -0.04 per unit of volatility. If you would invest 31,655 in Fast Retailing Co on November 18, 2024 and sell it today you would lose (170.00) from holding Fast Retailing Co or give up 0.54% 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. Fast Retailing Co
Performance |
| Timeline |
| Bank Rakyat |
| Fast Retailing |
Bank Rakyat and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Fast Retailing
The main advantage of trading using opposite Bank Rakyat and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Bank Rakyat vs. Banco Bradesco SA | Bank Rakyat vs. Itau Unibanco Banco | Bank Rakyat vs. Lloyds Banking Group | Bank Rakyat vs. Deutsche Bank AG |
| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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