Correlation Between BANK RAKYAT and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Chongqing Machinery 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 Chongqing Machinery 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 Chongqing Machinery Electric, you can compare the effects of market volatilities on BANK RAKYAT and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Chongqing Machinery.
Diversification Opportunities for BANK RAKYAT and Chongqing Machinery
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BANK and Chongqing is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Chongqing Machinery go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Chongqing Machinery
Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 30.04 times less return on investment than Chongqing Machinery. But when comparing it to its historical volatility, BANK RAKYAT IND is 2.23 times less risky than Chongqing Machinery. It trades about 0.0 of its potential returns per unit of risk. Chongqing Machinery Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.05 in Chongqing Machinery Electric on August 29, 2024 and sell it today you would earn a total of 5.40 from holding Chongqing Machinery Electric or generate 263.41% 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. Chongqing Machinery Electric
Performance |
| Timeline |
| BANK RAKYAT IND |
| Chongqing Machinery |
BANK RAKYAT and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Chongqing Machinery
The main advantage of trading using opposite BANK RAKYAT and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery'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 |
| Chongqing Machinery vs. Park Hotels Resorts | Chongqing Machinery vs. Materialise NV | Chongqing Machinery vs. InterContinental Hotels Group | Chongqing Machinery vs. Summit Hotel Properties |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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