Correlation Between BANK RAKYAT and SPROUTS FARMERS
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and SPROUTS FARMERS 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 SPROUTS FARMERS 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 SPROUTS FARMERS MKT, you can compare the effects of market volatilities on BANK RAKYAT and SPROUTS FARMERS 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 SPROUTS FARMERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and SPROUTS FARMERS.
Diversification Opportunities for BANK RAKYAT and SPROUTS FARMERS
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and SPROUTS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and SPROUTS FARMERS MKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPROUTS FARMERS MKT 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 SPROUTS FARMERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPROUTS FARMERS MKT has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and SPROUTS FARMERS go up and down completely randomly.
Pair Corralation between BANK RAKYAT and SPROUTS FARMERS
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the SPROUTS FARMERS. In addition to that, BANK RAKYAT is 1.06 times more volatile than SPROUTS FARMERS MKT. It trades about -0.01 of its total potential returns per unit of risk. SPROUTS FARMERS MKT is currently generating about 0.17 per unit of volatility. If you would invest 2,847 in SPROUTS FARMERS MKT on October 16, 2024 and sell it today you would earn a total of 10,753 from holding SPROUTS FARMERS MKT or generate 377.7% 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. SPROUTS FARMERS MKT
Performance |
| Timeline |
| BANK RAKYAT IND |
| SPROUTS FARMERS MKT |
BANK RAKYAT and SPROUTS FARMERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and SPROUTS FARMERS
The main advantage of trading using opposite BANK RAKYAT and SPROUTS FARMERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, SPROUTS FARMERS 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 SPROUTS FARMERS will offset losses from the drop in SPROUTS FARMERS's long position.| BANK RAKYAT vs. Wyndham Hotels Resorts | BANK RAKYAT vs. Choice Hotels International | BANK RAKYAT vs. MELIA HOTELS | BANK RAKYAT vs. Park Hotels Resorts |
| SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc | SPROUTS FARMERS vs. Apple Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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