Correlation Between BANK RAKYAT and Metro AG
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on BANK RAKYAT and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Metro AG.
Diversification Opportunities for BANK RAKYAT and Metro AG
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and Metro is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Metro AG go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Metro AG
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to generate 1.24 times more return on investment than Metro AG. However, BANK RAKYAT is 1.24 times more volatile than Metro AG. It trades about -0.02 of its potential returns per unit of risk. Metro AG is currently generating about -0.04 per unit of risk. If you would invest 28.00 in BANK RAKYAT IND on September 1, 2024 and sell it today you would lose (2.00) from holding BANK RAKYAT IND or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
BANK RAKYAT IND vs. Metro AG
Performance |
| Timeline |
| BANK RAKYAT IND |
| Metro AG |
BANK RAKYAT and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Metro AG
The main advantage of trading using opposite BANK RAKYAT and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| BANK RAKYAT vs. Genco Shipping Trading | BANK RAKYAT vs. Highlight Communications AG | BANK RAKYAT vs. MGIC INVESTMENT | BANK RAKYAT vs. WisdomTree Investments |
| Metro AG vs. HANOVER INSURANCE | Metro AG vs. Safety Insurance Group | Metro AG vs. LIFENET INSURANCE CO | Metro AG vs. Zurich Insurance Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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