Correlation Between BANK RAKYAT and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and MGIC Investment 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 MGIC Investment 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 MGIC Investment, you can compare the effects of market volatilities on BANK RAKYAT and MGIC Investment 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 MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and MGIC Investment.
Diversification Opportunities for BANK RAKYAT and MGIC Investment
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and MGIC is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and MGIC Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment 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 MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and MGIC Investment go up and down completely randomly.
Pair Corralation between BANK RAKYAT and MGIC Investment
Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 12.35 times less return on investment than MGIC Investment. In addition to that, BANK RAKYAT is 1.86 times more volatile than MGIC Investment. It trades about 0.0 of its total potential returns per unit of risk. MGIC Investment is currently generating about 0.11 per unit of volatility. If you would invest 1,147 in MGIC Investment on September 14, 2024 and sell it today you would earn a total of 1,193 from holding MGIC Investment or generate 104.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. MGIC Investment
Performance |
| Timeline |
| BANK RAKYAT IND |
| MGIC Investment |
BANK RAKYAT and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and MGIC Investment
The main advantage of trading using opposite BANK RAKYAT and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment's long position.| BANK RAKYAT vs. Gamma Communications plc | BANK RAKYAT vs. Highlight Communications AG | BANK RAKYAT vs. Mobilezone Holding AG | BANK RAKYAT vs. SYSTEMAIR AB |
| MGIC Investment vs. MELIA HOTELS | MGIC Investment vs. Xenia Hotels Resorts | MGIC Investment vs. Host Hotels Resorts | MGIC Investment vs. Park Hotels Resorts |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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