Correlation Between Bank Rakyat and Ceconomy
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Ceconomy 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 Ceconomy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Ceconomy AG ADR, you can compare the effects of market volatilities on Bank Rakyat and Ceconomy 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 Ceconomy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Ceconomy.
Diversification Opportunities for Bank Rakyat and Ceconomy
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Ceconomy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Ceconomy AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceconomy AG ADR 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 Ceconomy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceconomy AG ADR has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Ceconomy go up and down completely randomly.
Pair Corralation between Bank Rakyat and Ceconomy
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Ceconomy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 2.43 times less risky than Ceconomy. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Ceconomy AG ADR is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 46.00 in Ceconomy AG ADR on November 18, 2024 and sell it today you would earn a total of 18.00 from holding Ceconomy AG ADR or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Ceconomy AG ADR
Performance |
| Timeline |
| Bank Rakyat |
| Ceconomy AG ADR |
Bank Rakyat and Ceconomy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Ceconomy
The main advantage of trading using opposite Bank Rakyat and Ceconomy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Ceconomy 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 Ceconomy will offset losses from the drop in Ceconomy'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 |
| Ceconomy vs. Green River Gold | Ceconomy vs. Dixons Carphone plc | Ceconomy vs. Tandy Leather Factory | Ceconomy vs. Card Factory plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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