Correlation Between BANK RAKYAT and National Storage
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and National Storage 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 National Storage 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 National Storage Affiliates, you can compare the effects of market volatilities on BANK RAKYAT and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and National Storage.
Diversification Opportunities for BANK RAKYAT and National Storage
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and National is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and National Storage go up and down completely randomly.
Pair Corralation between BANK RAKYAT and National Storage
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the National Storage. In addition to that, BANK RAKYAT is 1.31 times more volatile than National Storage Affiliates. It trades about -0.07 of its total potential returns per unit of risk. National Storage Affiliates is currently generating about 0.04 per unit of volatility. If you would invest 4,055 in National Storage Affiliates on August 28, 2024 and sell it today you would earn a total of 134.00 from holding National Storage Affiliates or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
BANK RAKYAT IND vs. National Storage Affiliates
Performance |
| Timeline |
| BANK RAKYAT IND |
| National Storage Aff |
BANK RAKYAT and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and National Storage
The main advantage of trading using opposite BANK RAKYAT and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage'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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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