Correlation Between Bank Rakyat and Indofood CBP
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Indofood CBP 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 Indofood CBP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Indofood CBP Sukses, you can compare the effects of market volatilities on Bank Rakyat and Indofood CBP 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 Indofood CBP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Indofood CBP.
Diversification Opportunities for Bank Rakyat and Indofood CBP
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Indofood is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Indofood CBP Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood CBP Sukses 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 Indofood CBP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood CBP Sukses has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Indofood CBP go up and down completely randomly.
Pair Corralation between Bank Rakyat and Indofood CBP
Assuming the 90 days horizon Bank Rakyat is expected to generate 0.77 times more return on investment than Indofood CBP. However, Bank Rakyat is 1.3 times less risky than Indofood CBP. It trades about -0.09 of its potential returns per unit of risk. Indofood CBP Sukses is currently generating about -0.21 per unit of risk. If you would invest 1,394 in Bank Rakyat on September 12, 2024 and sell it today you would lose (47.00) from holding Bank Rakyat or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Bank Rakyat vs. Indofood CBP Sukses
Performance |
| Timeline |
| Bank Rakyat |
| Indofood CBP Sukses |
Bank Rakyat and Indofood CBP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Indofood CBP
The main advantage of trading using opposite Bank Rakyat and Indofood CBP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Indofood CBP 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 Indofood CBP will offset losses from the drop in Indofood CBP's long position.| Bank Rakyat vs. PT Bank Rakyat | Bank Rakyat vs. Morningstar Unconstrained Allocation | Bank Rakyat vs. Bondbloxx ETF Trust | Bank Rakyat vs. Spring Valley Acquisition |
| Indofood CBP vs. Indofood Sukses Makmur | Indofood CBP vs. First Pacific | Indofood CBP vs. Grupo Herdez SAB | Indofood CBP vs. Fraser and Neave |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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