Correlation Between BANK RAKYAT and Element Solutions
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Element Solutions 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 Element Solutions 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 Element Solutions, you can compare the effects of market volatilities on BANK RAKYAT and Element Solutions 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 Element Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Element Solutions.
Diversification Opportunities for BANK RAKYAT and Element Solutions
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and Element is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Element Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Solutions 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 Element Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Solutions has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Element Solutions go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Element Solutions
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to generate 1.22 times more return on investment than Element Solutions. However, BANK RAKYAT is 1.22 times more volatile than Element Solutions. It trades about -0.22 of its potential returns per unit of risk. Element Solutions is currently generating about -0.41 per unit of risk. If you would invest 26.00 in BANK RAKYAT IND on September 24, 2024 and sell it today you would lose (2.00) from holding BANK RAKYAT IND or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK RAKYAT IND vs. Element Solutions
Performance |
| Timeline |
| BANK RAKYAT IND |
| Element Solutions |
BANK RAKYAT and Element Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and Element Solutions
The main advantage of trading using opposite BANK RAKYAT and Element Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Element Solutions 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 Element Solutions will offset losses from the drop in Element Solutions' long position.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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