Correlation Between BANK RAKYAT and WOLFDEN RES
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and WOLFDEN RES 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 WOLFDEN RES 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 WOLFDEN RES P, you can compare the effects of market volatilities on BANK RAKYAT and WOLFDEN RES 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 WOLFDEN RES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and WOLFDEN RES.
Diversification Opportunities for BANK RAKYAT and WOLFDEN RES
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and WOLFDEN is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and WOLFDEN RES P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOLFDEN RES P 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 WOLFDEN RES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOLFDEN RES P has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and WOLFDEN RES go up and down completely randomly.
Pair Corralation between BANK RAKYAT and WOLFDEN RES
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the WOLFDEN RES. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 18.86 times less risky than WOLFDEN RES. The stock trades about -0.22 of its potential returns per unit of risk. The WOLFDEN RES P is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3.15 in WOLFDEN RES P on September 24, 2024 and sell it today you would lose (0.45) from holding WOLFDEN RES P or give up 14.29% 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. WOLFDEN RES P
Performance |
| Timeline |
| BANK RAKYAT IND |
| WOLFDEN RES P |
BANK RAKYAT and WOLFDEN RES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK RAKYAT and WOLFDEN RES
The main advantage of trading using opposite BANK RAKYAT and WOLFDEN RES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, WOLFDEN RES 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 WOLFDEN RES will offset losses from the drop in WOLFDEN RES's long position.| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Microsoft |
| WOLFDEN RES vs. Rio Tinto Group | WOLFDEN RES vs. Anglo American plc | WOLFDEN RES vs. Liontown Resources Limited | WOLFDEN RES vs. NEXA RESOURCES SA |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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