Correlation Between BANK RAKYAT and TOKYO GAS
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and TOKYO GAS 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 TOKYO GAS 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 TOKYO GAS, you can compare the effects of market volatilities on BANK RAKYAT and TOKYO GAS 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 TOKYO GAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and TOKYO GAS.
Diversification Opportunities for BANK RAKYAT and TOKYO GAS
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BANK and TOKYO is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and TOKYO GAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOKYO GAS 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 TOKYO GAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOKYO GAS has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and TOKYO GAS go up and down completely randomly.
Pair Corralation between BANK RAKYAT and TOKYO GAS
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the TOKYO GAS. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 2.24 times less risky than TOKYO GAS. The stock trades about -0.23 of its potential returns per unit of risk. The TOKYO GAS is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,890 in TOKYO GAS on August 24, 2024 and sell it today you would earn a total of 390.00 from holding TOKYO GAS or generate 20.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
BANK RAKYAT IND vs. TOKYO GAS
Performance |
| Timeline |
| BANK RAKYAT IND |
| TOKYO GAS |
BANK RAKYAT and TOKYO GAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and TOKYO GAS
The main advantage of trading using opposite BANK RAKYAT and TOKYO GAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, TOKYO GAS 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 TOKYO GAS will offset losses from the drop in TOKYO GAS's long position.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc |
| TOKYO GAS vs. Ribbon Communications | TOKYO GAS vs. Comba Telecom Systems | TOKYO GAS vs. PARKEN Sport Entertainment | TOKYO GAS vs. SBA Communications Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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