Correlation Between Bank Rakyat and Stallion Discoveries
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Stallion Discoveries 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 Stallion Discoveries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Stallion Discoveries Corp, you can compare the effects of market volatilities on Bank Rakyat and Stallion Discoveries 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 Stallion Discoveries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Stallion Discoveries.
Diversification Opportunities for Bank Rakyat and Stallion Discoveries
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Stallion is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Stallion Discoveries Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stallion Discoveries Corp 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 Stallion Discoveries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stallion Discoveries Corp has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Stallion Discoveries go up and down completely randomly.
Pair Corralation between Bank Rakyat and Stallion Discoveries
Assuming the 90 days horizon Bank Rakyat is expected to generate 0.22 times more return on investment than Stallion Discoveries. However, Bank Rakyat is 4.49 times less risky than Stallion Discoveries. It trades about -0.32 of its potential returns per unit of risk. Stallion Discoveries Corp is currently generating about -0.31 per unit of risk. If you would invest 1,487 in Bank Rakyat on September 3, 2024 and sell it today you would lose (141.00) from holding Bank Rakyat or give up 9.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Stallion Discoveries Corp
Performance |
| Timeline |
| Bank Rakyat |
| Stallion Discoveries Corp |
Bank Rakyat and Stallion Discoveries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Stallion Discoveries
The main advantage of trading using opposite Bank Rakyat and Stallion Discoveries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Stallion Discoveries 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 Stallion Discoveries will offset losses from the drop in Stallion Discoveries' 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 |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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