Correlation Between BANK RAKYAT and Caterpillar
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Caterpillar 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 Caterpillar 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 Caterpillar, you can compare the effects of market volatilities on BANK RAKYAT and Caterpillar 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 Caterpillar. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Caterpillar.
Diversification Opportunities for BANK RAKYAT and Caterpillar
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BANK and Caterpillar is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Caterpillar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caterpillar 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 Caterpillar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caterpillar has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Caterpillar go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Caterpillar
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Caterpillar. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.18 times less risky than Caterpillar. The stock trades about -0.14 of its potential returns per unit of risk. The Caterpillar is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 34,950 in Caterpillar on September 2, 2024 and sell it today you would earn a total of 3,600 from holding Caterpillar or generate 10.3% 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. Caterpillar
Performance |
| Timeline |
| BANK RAKYAT IND |
| Caterpillar |
BANK RAKYAT and Caterpillar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Caterpillar
The main advantage of trading using opposite BANK RAKYAT and Caterpillar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Caterpillar 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 Caterpillar will offset losses from the drop in Caterpillar's long position.| BANK RAKYAT vs. SIVERS SEMICONDUCTORS AB | BANK RAKYAT vs. Darden Restaurants | BANK RAKYAT vs. Reliance Steel Aluminum | BANK RAKYAT vs. Q2M Managementberatung AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |