Correlation Between Bank Rakyat and Sumitomo Electric
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Sumitomo 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 Sumitomo 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 Sumitomo Electric Industries, you can compare the effects of market volatilities on Bank Rakyat and Sumitomo 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 Sumitomo Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Sumitomo Electric.
Diversification Opportunities for Bank Rakyat and Sumitomo Electric
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Sumitomo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Sumitomo Electric Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo 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 Sumitomo Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Electric has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Sumitomo Electric go up and down completely randomly.
Pair Corralation between Bank Rakyat and Sumitomo Electric
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Sumitomo Electric. In addition to that, Bank Rakyat is 1.49 times more volatile than Sumitomo Electric Industries. It trades about -0.04 of its total potential returns per unit of risk. Sumitomo Electric Industries is currently generating about 0.11 per unit of volatility. If you would invest 1,146 in Sumitomo Electric Industries on August 29, 2024 and sell it today you would earn a total of 511.00 from holding Sumitomo Electric Industries or generate 44.59% 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. Sumitomo Electric Industries
Performance |
| Timeline |
| Bank Rakyat |
| Sumitomo Electric |
Bank Rakyat and Sumitomo Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Sumitomo Electric
The main advantage of trading using opposite Bank Rakyat and Sumitomo Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Sumitomo 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 Sumitomo Electric will offset losses from the drop in Sumitomo Electric's long position.| Bank Rakyat vs. Israel Discount Bank | Bank Rakyat vs. Baraboo Bancorporation | Bank Rakyat vs. Danske Bank AS | Bank Rakyat vs. Jyske Bank AS |
| Sumitomo Electric vs. Analog Devices | Sumitomo Electric vs. Microchip Technology | Sumitomo Electric vs. IPG Photonics | Sumitomo Electric vs. Marti 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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