Correlation Between Bank Rakyat and Hi Sun
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Hi Sun 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 Hi Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Hi Sun Technology, you can compare the effects of market volatilities on Bank Rakyat and Hi Sun 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 Hi Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Hi Sun.
Diversification Opportunities for Bank Rakyat and Hi Sun
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and HISNF is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Hi Sun Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Sun Technology 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 Hi Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Sun Technology has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Hi Sun go up and down completely randomly.
Pair Corralation between Bank Rakyat and Hi Sun
Assuming the 90 days horizon Bank Rakyat is expected to generate 239.55 times less return on investment than Hi Sun. But when comparing it to its historical volatility, Bank Rakyat is 6.25 times less risky than Hi Sun. It trades about 0.0 of its potential returns per unit of risk. Hi Sun Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Hi Sun Technology on September 3, 2024 and sell it today you would lose (1.80) from holding Hi Sun Technology or give up 36.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Hi Sun Technology
Performance |
| Timeline |
| Bank Rakyat |
| Hi Sun Technology |
Bank Rakyat and Hi Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Hi Sun
The main advantage of trading using opposite Bank Rakyat and Hi Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Hi Sun 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 Hi Sun will offset losses from the drop in Hi Sun'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 |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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