Correlation Between Bank Rakyat and Niagara Mohawk
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Niagara Mohawk 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 Niagara Mohawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Niagara Mohawk Power, you can compare the effects of market volatilities on Bank Rakyat and Niagara Mohawk 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 Niagara Mohawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Niagara Mohawk.
Diversification Opportunities for Bank Rakyat and Niagara Mohawk
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Niagara is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Niagara Mohawk Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niagara Mohawk Power 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 Niagara Mohawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niagara Mohawk Power has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Niagara Mohawk go up and down completely randomly.
Pair Corralation between Bank Rakyat and Niagara Mohawk
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Niagara Mohawk. In addition to that, Bank Rakyat is 2.34 times more volatile than Niagara Mohawk Power. It trades about -0.37 of its total potential returns per unit of risk. Niagara Mohawk Power is currently generating about -0.24 per unit of volatility. If you would invest 6,775 in Niagara Mohawk Power on September 4, 2024 and sell it today you would lose (215.00) from holding Niagara Mohawk Power or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank Rakyat vs. Niagara Mohawk Power
Performance |
| Timeline |
| Bank Rakyat |
| Niagara Mohawk Power |
Bank Rakyat and Niagara Mohawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Niagara Mohawk
The main advantage of trading using opposite Bank Rakyat and Niagara Mohawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Niagara Mohawk 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 Niagara Mohawk will offset losses from the drop in Niagara Mohawk'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 |
| Niagara Mohawk vs. Teleflex Incorporated | Niagara Mohawk vs. HUTCHMED DRC | Niagara Mohawk vs. Amgen Inc | Niagara Mohawk vs. Radcom |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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