Correlation Between Bank Rakyat and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Telenor ASA 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 Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Telenor ASA ADR, you can compare the effects of market volatilities on Bank Rakyat and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Telenor ASA.
Diversification Opportunities for Bank Rakyat and Telenor ASA
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Telenor is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Telenor ASA go up and down completely randomly.
Pair Corralation between Bank Rakyat and Telenor ASA
Assuming the 90 days horizon Bank Rakyat is expected to generate 30.71 times less return on investment than Telenor ASA. In addition to that, Bank Rakyat is 1.34 times more volatile than Telenor ASA ADR. It trades about 0.0 of its total potential returns per unit of risk. Telenor ASA ADR is currently generating about 0.04 per unit of volatility. If you would invest 961.00 in Telenor ASA ADR on September 1, 2024 and sell it today you would earn a total of 215.00 from holding Telenor ASA ADR or generate 22.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Telenor ASA ADR
Performance |
| Timeline |
| Bank Rakyat |
| Telenor ASA ADR |
Bank Rakyat and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Telenor ASA
The main advantage of trading using opposite Bank Rakyat and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Bank Rakyat vs. Piraeus Bank SA | Bank Rakyat vs. Turkiye Garanti Bankasi | Bank Rakyat vs. Delhi Bank Corp | Bank Rakyat vs. Uwharrie Capital Corp |
| Telenor ASA vs. HUMANA INC | Telenor ASA vs. Aquagold International | Telenor ASA vs. Barloworld Ltd ADR | Telenor ASA vs. Thrivent High Yield |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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