Correlation Between BANK RAKYAT and Valero Energy
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Valero Energy 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 Valero Energy 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 Valero Energy, you can compare the effects of market volatilities on BANK RAKYAT and Valero Energy 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 Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Valero Energy.
Diversification Opportunities for BANK RAKYAT and Valero Energy
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and Valero is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy 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 Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Valero Energy go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Valero Energy
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to generate 1.76 times more return on investment than Valero Energy. However, BANK RAKYAT is 1.76 times more volatile than Valero Energy. It trades about -0.14 of its potential returns per unit of risk. Valero Energy is currently generating about -0.39 per unit of risk. If you would invest 24.00 in BANK RAKYAT IND on September 22, 2024 and sell it today you would lose (2.00) from holding BANK RAKYAT IND or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. Valero Energy
Performance |
| Timeline |
| BANK RAKYAT IND |
| Valero Energy |
BANK RAKYAT and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Valero Energy
The main advantage of trading using opposite BANK RAKYAT and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Valero Energy 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 Valero Energy will offset losses from the drop in Valero Energy's long position.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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