Correlation Between Bank Rakyat and Renewal Fuels
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Renewal Fuels 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 Renewal Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Renewal Fuels, you can compare the effects of market volatilities on Bank Rakyat and Renewal Fuels 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 Renewal Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Renewal Fuels.
Diversification Opportunities for Bank Rakyat and Renewal Fuels
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Renewal is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Renewal Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renewal Fuels 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 Renewal Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renewal Fuels has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Renewal Fuels go up and down completely randomly.
Pair Corralation between Bank Rakyat and Renewal Fuels
Assuming the 90 days horizon Bank Rakyat is expected to generate 0.14 times more return on investment than Renewal Fuels. However, Bank Rakyat is 7.19 times less risky than Renewal Fuels. It trades about -0.17 of its potential returns per unit of risk. Renewal Fuels is currently generating about -0.13 per unit of risk. If you would invest 1,653 in Bank Rakyat on September 3, 2024 and sell it today you would lose (307.00) from holding Bank Rakyat or give up 18.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Bank Rakyat vs. Renewal Fuels
Performance |
| Timeline |
| Bank Rakyat |
| Renewal Fuels |
Bank Rakyat and Renewal Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Renewal Fuels
The main advantage of trading using opposite Bank Rakyat and Renewal Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Renewal Fuels 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 Renewal Fuels will offset losses from the drop in Renewal Fuels' 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 |
| Renewal Fuels vs. C Bond Systems | Renewal Fuels vs. Lhyfe SA | Renewal Fuels vs. Industrial Nanotech | Renewal Fuels vs. CN Energy 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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