Correlation Between Bank Rakyat and NSTAR Electric
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and NSTAR Electric 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 NSTAR Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and NSTAR Electric, you can compare the effects of market volatilities on Bank Rakyat and NSTAR Electric 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 NSTAR Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and NSTAR Electric.
Diversification Opportunities for Bank Rakyat and NSTAR Electric
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and NSTAR is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and NSTAR Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSTAR Electric 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 NSTAR Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSTAR Electric has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and NSTAR Electric go up and down completely randomly.
Pair Corralation between Bank Rakyat and NSTAR Electric
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the NSTAR Electric. In addition to that, Bank Rakyat is 12.53 times more volatile than NSTAR Electric. It trades about -0.07 of its total potential returns per unit of risk. NSTAR Electric is currently generating about 0.22 per unit of volatility. If you would invest 8,350 in NSTAR Electric on September 13, 2024 and sell it today you would earn a total of 50.00 from holding NSTAR Electric or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. NSTAR Electric
Performance |
| Timeline |
| Bank Rakyat |
| NSTAR Electric |
Bank Rakyat and NSTAR Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and NSTAR Electric
The main advantage of trading using opposite Bank Rakyat and NSTAR Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, NSTAR Electric 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 NSTAR Electric will offset losses from the drop in NSTAR Electric'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 |
| NSTAR Electric vs. AMCON Distributing | NSTAR Electric vs. Marfrig Global Foods | NSTAR Electric vs. Vishay Precision Group | NSTAR Electric vs. Everspin 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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