Correlation Between Bayan Resources and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Bank Rakyat 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 Bayan Resources and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayan Resources Tbk and Bank Rakyat Indonesia, you can compare the effects of market volatilities on Bayan Resources and Bank Rakyat 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 Bayan Resources with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Bank Rakyat.
Diversification Opportunities for Bayan Resources and Bank Rakyat
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bayan and Bank is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Bank Rakyat Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat Indonesia and Bayan Resources 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 Bayan Resources Tbk are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat Indonesia has no effect on the direction of Bayan Resources i.e., Bayan Resources and Bank Rakyat go up and down completely randomly.
Pair Corralation between Bayan Resources and Bank Rakyat
Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 1.06 times more return on investment than Bank Rakyat. However, Bayan Resources is 1.06 times more volatile than Bank Rakyat Indonesia. It trades about 0.36 of its potential returns per unit of risk. Bank Rakyat Indonesia is currently generating about -0.48 per unit of risk. If you would invest 1,712,500 in Bayan Resources Tbk on August 24, 2024 and sell it today you would earn a total of 187,500 from holding Bayan Resources Tbk or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Bank Rakyat Indonesia
Performance |
| Timeline |
| Bayan Resources Tbk |
| Bank Rakyat Indonesia |
Bayan Resources and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Bank Rakyat
The main advantage of trading using opposite Bayan Resources and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| Bayan Resources vs. Petrosea Tbk | Bayan Resources vs. Harum Energy Tbk | Bayan Resources vs. Perdana Karya Perkasa | Bayan Resources vs. Samindo Resources Tbk |
| Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Bank Negara Indonesia | Bank Rakyat vs. Telkom Indonesia Tbk |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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