Correlation Between Bank Rakyat and Tigo Energy
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Tigo Energy 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 Tigo Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Tigo Energy, you can compare the effects of market volatilities on Bank Rakyat and Tigo Energy 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 Tigo Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Tigo Energy.
Diversification Opportunities for Bank Rakyat and Tigo Energy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Tigo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo Energy 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Tigo Energy go up and down completely randomly.
Pair Corralation between Bank Rakyat and Tigo Energy
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Tigo Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 3.15 times less risky than Tigo Energy. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Tigo Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 114.00 in Tigo Energy on August 28, 2024 and sell it today you would lose (12.00) from holding Tigo Energy or give up 10.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Tigo Energy
Performance |
| Timeline |
| Bank Rakyat |
| Tigo Energy |
Bank Rakyat and Tigo Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Tigo Energy
The main advantage of trading using opposite Bank Rakyat and Tigo Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Tigo Energy 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 Tigo Energy will offset losses from the drop in Tigo Energy's long position.The idea behind Bank Rakyat and Tigo Energy 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.| Tigo Energy vs. CenterPoint Energy | Tigo Energy vs. NRG Energy | Tigo Energy vs. Black Hills | Tigo Energy vs. Everspin 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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