Correlation Between Bank Rakyat and First Solar
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and First Solar 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 First Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and First Solar, you can compare the effects of market volatilities on Bank Rakyat and First Solar 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 First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and First Solar.
Diversification Opportunities for Bank Rakyat and First Solar
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and First is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and First Solar go up and down completely randomly.
Pair Corralation between Bank Rakyat and First Solar
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the First Solar. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 2.09 times less risky than First Solar. The pink sheet trades about -0.21 of its potential returns per unit of risk. The First Solar is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 19,967 in First Solar on August 30, 2024 and sell it today you would lose (710.00) from holding First Solar or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bank Rakyat vs. First Solar
Performance |
| Timeline |
| Bank Rakyat |
| First Solar |
Bank Rakyat and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and First Solar
The main advantage of trading using opposite Bank Rakyat and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, First Solar 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 First Solar will offset losses from the drop in First Solar's long position.| Bank Rakyat vs. Israel Discount Bank | Bank Rakyat vs. Baraboo Bancorporation | Bank Rakyat vs. Danske Bank AS | Bank Rakyat vs. Jyske Bank AS |
| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge Technologies |
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.
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