Correlation Between BANK RAKYAT and Lennox International
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Lennox International 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 Lennox International 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 Lennox International, you can compare the effects of market volatilities on BANK RAKYAT and Lennox International 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 Lennox International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Lennox International.
Diversification Opportunities for BANK RAKYAT and Lennox International
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and Lennox is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Lennox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lennox International 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 Lennox International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lennox International has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Lennox International go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Lennox International
Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 1.04 times less return on investment than Lennox International. In addition to that, BANK RAKYAT is 1.79 times more volatile than Lennox International. It trades about 0.1 of its total potential returns per unit of risk. Lennox International is currently generating about 0.19 per unit of volatility. If you would invest 59,044 in Lennox International on October 21, 2024 and sell it today you would earn a total of 3,116 from holding Lennox International or generate 5.28% 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. Lennox International
Performance |
| Timeline |
| BANK RAKYAT IND |
| Lennox International |
BANK RAKYAT and Lennox International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Lennox International
The main advantage of trading using opposite BANK RAKYAT and Lennox International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Lennox International 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 Lennox International will offset losses from the drop in Lennox International's long position.| BANK RAKYAT vs. GRENKELEASING Dusseldorf | BANK RAKYAT vs. Eidesvik Offshore ASA | BANK RAKYAT vs. TRADEGATE | BANK RAKYAT vs. EIDESVIK OFFSHORE NK |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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