Correlation Between BANK RAKYAT and ITV Plc
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and ITV Plc 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 ITV Plc 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 ITV plc, you can compare the effects of market volatilities on BANK RAKYAT and ITV Plc 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 ITV Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and ITV Plc.
Diversification Opportunities for BANK RAKYAT and ITV Plc
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and ITV is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and ITV plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITV plc 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 ITV Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITV plc has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and ITV Plc go up and down completely randomly.
Pair Corralation between BANK RAKYAT and ITV Plc
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the ITV Plc. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 2.48 times less risky than ITV Plc. The stock trades about -0.21 of its potential returns per unit of risk. The ITV plc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 90.00 in ITV plc on August 29, 2024 and sell it today you would lose (5.00) from holding ITV plc or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. ITV plc
Performance |
| Timeline |
| BANK RAKYAT IND |
| ITV plc |
BANK RAKYAT and ITV Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and ITV Plc
The main advantage of trading using opposite BANK RAKYAT and ITV Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, ITV Plc 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 ITV Plc will offset losses from the drop in ITV Plc's long position.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Microsoft | BANK RAKYAT vs. Microsoft |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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