Correlation Between BANK RAKYAT and Assured Guaranty
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Assured Guaranty 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 Assured Guaranty 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 Assured Guaranty, you can compare the effects of market volatilities on BANK RAKYAT and Assured Guaranty 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 Assured Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Assured Guaranty.
Diversification Opportunities for BANK RAKYAT and Assured Guaranty
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BANK and Assured is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Assured Guaranty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assured Guaranty 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 Assured Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assured Guaranty has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Assured Guaranty go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Assured Guaranty
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Assured Guaranty. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.39 times less risky than Assured Guaranty. The stock trades about -0.01 of its potential returns per unit of risk. The Assured Guaranty is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,494 in Assured Guaranty on December 4, 2024 and sell it today you would earn a total of 3,806 from holding Assured Guaranty or generate 84.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BANK RAKYAT IND vs. Assured Guaranty
Performance |
| Timeline |
| BANK RAKYAT IND |
| Assured Guaranty |
BANK RAKYAT and Assured Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Assured Guaranty
The main advantage of trading using opposite BANK RAKYAT and Assured Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Assured Guaranty 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 Assured Guaranty will offset losses from the drop in Assured Guaranty's long position.| BANK RAKYAT vs. Adtalem Global Education | BANK RAKYAT vs. Perdoceo Education | BANK RAKYAT vs. Strategic Education | BANK RAKYAT vs. betterU Education Corp |
| Assured Guaranty vs. MOVIE GAMES SA | Assured Guaranty vs. TRAVEL LEISURE DL 01 | Assured Guaranty vs. Universal Display | Assured Guaranty vs. Playa Hotels Resorts |
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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