Correlation Between Bank Rakyat and Sinopec Oilfield
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Sinopec Oilfield 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 Sinopec Oilfield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Sinopec Oilfield Service, you can compare the effects of market volatilities on Bank Rakyat and Sinopec Oilfield 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 Sinopec Oilfield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Sinopec Oilfield.
Diversification Opportunities for Bank Rakyat and Sinopec Oilfield
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Sinopec is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Sinopec Oilfield Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Oilfield Service 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 Sinopec Oilfield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Oilfield Service has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Sinopec Oilfield go up and down completely randomly.
Pair Corralation between Bank Rakyat and Sinopec Oilfield
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Sinopec Oilfield. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 3.7 times less risky than Sinopec Oilfield. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Sinopec Oilfield Service is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 6.81 in Sinopec Oilfield Service on September 4, 2024 and sell it today you would lose (0.27) from holding Sinopec Oilfield Service or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank Rakyat vs. Sinopec Oilfield Service
Performance |
| Timeline |
| Bank Rakyat |
| Sinopec Oilfield Service |
Bank Rakyat and Sinopec Oilfield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Sinopec Oilfield
The main advantage of trading using opposite Bank Rakyat and Sinopec Oilfield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Sinopec Oilfield 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 Sinopec Oilfield will offset losses from the drop in Sinopec Oilfield's 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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