Correlation Between Bank Rakyat and Toto
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Toto 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 Toto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Toto, you can compare the effects of market volatilities on Bank Rakyat and Toto 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 Toto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Toto.
Diversification Opportunities for Bank Rakyat and Toto
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Toto is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Toto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toto 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 Toto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toto has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Toto go up and down completely randomly.
Pair Corralation between Bank Rakyat and Toto
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Toto. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 1.32 times less risky than Toto. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Toto is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,812 in Toto on August 30, 2024 and sell it today you would lose (144.00) from holding Toto or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Toto
Performance |
| Timeline |
| Bank Rakyat |
| Toto |
Bank Rakyat and Toto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Toto
The main advantage of trading using opposite Bank Rakyat and Toto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Toto 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 Toto will offset losses from the drop in Toto's long position.The idea behind Bank Rakyat and Toto pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Toto vs. Lixil Group Corp | Toto vs. Toray Industries ADR | Toto vs. Secom Co Ltd | Toto vs. Nitto Denko Corp |
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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