Correlation Between BANK RAKYAT and Safran SA
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Safran SA 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 Safran SA 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 Safran SA, you can compare the effects of market volatilities on BANK RAKYAT and Safran SA 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 Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Safran SA.
Diversification Opportunities for BANK RAKYAT and Safran SA
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and Safran is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA 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 Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Safran SA go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Safran SA
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Safran SA. In addition to that, BANK RAKYAT is 1.59 times more volatile than Safran SA. It trades about -0.07 of its total potential returns per unit of risk. Safran SA is currently generating about 0.09 per unit of volatility. If you would invest 21,160 in Safran SA on August 29, 2024 and sell it today you would earn a total of 560.00 from holding Safran SA or generate 2.65% 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. Safran SA
Performance |
| Timeline |
| BANK RAKYAT IND |
| Safran SA |
BANK RAKYAT and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Safran SA
The main advantage of trading using opposite BANK RAKYAT and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Safran SA 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 Safran SA will offset losses from the drop in Safran SA'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 |
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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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