Correlation Between BANK RAKYAT and Capitol Federal
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Capitol Federal 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 Capitol Federal 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 Capitol Federal Financial, you can compare the effects of market volatilities on BANK RAKYAT and Capitol Federal 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 Capitol Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Capitol Federal.
Diversification Opportunities for BANK RAKYAT and Capitol Federal
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BANK and Capitol is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Capitol Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Federal Financial 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 Capitol Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Federal Financial has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Capitol Federal go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Capitol Federal
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Capitol Federal. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.08 times less risky than Capitol Federal. The stock trades about -0.08 of its potential returns per unit of risk. The Capitol Federal Financial is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 630.00 in Capitol Federal Financial on September 11, 2024 and sell it today you would lose (20.00) from holding Capitol Federal Financial or give up 3.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
BANK RAKYAT IND vs. Capitol Federal Financial
Performance |
Timeline |
BANK RAKYAT IND |
Capitol Federal Financial |
BANK RAKYAT and Capitol Federal Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BANK RAKYAT and Capitol Federal
The main advantage of trading using opposite BANK RAKYAT and Capitol Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Capitol Federal 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 Capitol Federal will offset losses from the drop in Capitol Federal'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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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