Correlation Between BANK RAKYAT and INNELEC MULTIMMINHEO153
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153, you can compare the effects of market volatilities on BANK RAKYAT and INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and INNELEC MULTIMMINHEO153.
Diversification Opportunities for BANK RAKYAT and INNELEC MULTIMMINHEO153
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and INNELEC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and INNELEC MULTIMMINHEO153 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNELEC MULTIMMINHEO153 has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and INNELEC MULTIMMINHEO153 go up and down completely randomly.
Pair Corralation between BANK RAKYAT and INNELEC MULTIMMINHEO153
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to generate 1.27 times more return on investment than INNELEC MULTIMMINHEO153. However, BANK RAKYAT is 1.27 times more volatile than INNELEC MULTIMMINHEO153. It trades about -0.07 of its potential returns per unit of risk. INNELEC MULTIMMINHEO153 is currently generating about -0.09 per unit of risk. If you would invest 26.00 in BANK RAKYAT IND on August 28, 2024 and sell it today you would lose (1.00) from holding BANK RAKYAT IND or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. INNELEC MULTIMMINHEO153
Performance |
| Timeline |
| BANK RAKYAT IND |
| INNELEC MULTIMMINHEO153 |
BANK RAKYAT and INNELEC MULTIMMINHEO153 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and INNELEC MULTIMMINHEO153
The main advantage of trading using opposite BANK RAKYAT and INNELEC MULTIMMINHEO153 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, INNELEC MULTIMMINHEO153 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 INNELEC MULTIMMINHEO153 will offset losses from the drop in INNELEC MULTIMMINHEO153's long position.| BANK RAKYAT vs. Ultra Clean Holdings | BANK RAKYAT vs. United Airlines Holdings | BANK RAKYAT vs. SINGAPORE AIRLINES | BANK RAKYAT vs. PT Bank Maybank |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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