Correlation Between Bank Rakyat and Universal Media
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Universal Media 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 Universal Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Universal Media Group, you can compare the effects of market volatilities on Bank Rakyat and Universal Media 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 Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Universal Media.
Diversification Opportunities for Bank Rakyat and Universal Media
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Universal is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media Group 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 Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Universal Media go up and down completely randomly.
Pair Corralation between Bank Rakyat and Universal Media
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Universal Media. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 13.72 times less risky than Universal Media. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Universal Media Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3.30 in Universal Media Group on August 30, 2024 and sell it today you would earn a total of 0.39 from holding Universal Media Group or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat vs. Universal Media Group
Performance |
| Timeline |
| Bank Rakyat |
| Universal Media Group |
Bank Rakyat and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Universal Media
The main advantage of trading using opposite Bank Rakyat and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Universal Media 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 Universal Media will offset losses from the drop in Universal Media'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 |
| Universal Media vs. Kura Sushi USA | Universal Media vs. Kinsale Capital Group | Universal Media vs. GoHealth | Universal Media vs. RCI Hospitality Holdings |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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