Correlation Between BANK RAKYAT and Extra Space
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Extra Space 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 Extra Space 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 Extra Space Storage, you can compare the effects of market volatilities on BANK RAKYAT and Extra Space 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 Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Extra Space.
Diversification Opportunities for BANK RAKYAT and Extra Space
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BANK and Extra is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Extra Space go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Extra Space
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Extra Space. In addition to that, BANK RAKYAT is 1.71 times more volatile than Extra Space Storage. It trades about -0.07 of its total potential returns per unit of risk. Extra Space Storage is currently generating about 0.2 per unit of volatility. If you would invest 15,340 in Extra Space Storage on August 29, 2024 and sell it today you would earn a total of 935.00 from holding Extra Space Storage or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. Extra Space Storage
Performance |
| Timeline |
| BANK RAKYAT IND |
| Extra Space Storage |
BANK RAKYAT and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Extra Space
The main advantage of trading using opposite BANK RAKYAT and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space'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 |
| Extra Space vs. CPU SOFTWAREHOUSE | Extra Space vs. VITEC SOFTWARE GROUP | Extra Space vs. Xinhua Winshare Publishing | Extra Space vs. Laureate Education |
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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