Correlation Between BANK RAKYAT and GUOTAI JUNAN
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and GUOTAI JUNAN 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 GUOTAI JUNAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK RAKYAT IND and GUOTAI JUNAN SEC, you can compare the effects of market volatilities on BANK RAKYAT and GUOTAI JUNAN 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 GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and GUOTAI JUNAN.
Diversification Opportunities for BANK RAKYAT and GUOTAI JUNAN
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BANK and GUOTAI is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC 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 IND are associated (or correlated) with GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and GUOTAI JUNAN go up and down completely randomly.
Pair Corralation between BANK RAKYAT and GUOTAI JUNAN
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the GUOTAI JUNAN. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 3.57 times less risky than GUOTAI JUNAN. The stock trades about -0.2 of its potential returns per unit of risk. The GUOTAI JUNAN SEC is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 95.00 in GUOTAI JUNAN SEC on August 26, 2024 and sell it today you would earn a total of 42.00 from holding GUOTAI JUNAN SEC or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. GUOTAI JUNAN SEC
Performance |
| Timeline |
| BANK RAKYAT IND |
| GUOTAI JUNAN SEC |
BANK RAKYAT and GUOTAI JUNAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and GUOTAI JUNAN
The main advantage of trading using opposite BANK RAKYAT and GUOTAI JUNAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, GUOTAI JUNAN 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 GUOTAI JUNAN will offset losses from the drop in GUOTAI JUNAN's long position.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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