Correlation Between Choice Hotels and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Choice Hotels and BANK RAKYAT 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 Choice Hotels and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choice Hotels International and BANK RAKYAT IND, you can compare the effects of market volatilities on Choice Hotels and BANK RAKYAT 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 Choice Hotels with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choice Hotels and BANK RAKYAT.
Diversification Opportunities for Choice Hotels and BANK RAKYAT
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Choice and BANK is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Choice Hotels International and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND and Choice Hotels 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 Choice Hotels International are associated (or correlated) with BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of Choice Hotels i.e., Choice Hotels and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Choice Hotels and BANK RAKYAT
Assuming the 90 days horizon Choice Hotels International is expected to generate 0.68 times more return on investment than BANK RAKYAT. However, Choice Hotels International is 1.48 times less risky than BANK RAKYAT. It trades about -0.06 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.09 per unit of risk. If you would invest 14,070 in Choice Hotels International on October 30, 2024 and sell it today you would lose (470.00) from holding Choice Hotels International or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choice Hotels International vs. BANK RAKYAT IND
Performance |
| Timeline |
| Choice Hotels Intern |
| BANK RAKYAT IND |
Choice Hotels and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choice Hotels and BANK RAKYAT
The main advantage of trading using opposite Choice Hotels and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choice Hotels position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| Choice Hotels vs. Yuexiu Transport Infrastructure | Choice Hotels vs. CVR Medical Corp | Choice Hotels vs. ONWARD MEDICAL BV | Choice Hotels vs. DAIDO METAL TD |
| BANK RAKYAT vs. China Communications Services | BANK RAKYAT vs. HUTCHISON TELECOMM | BANK RAKYAT vs. DIVERSIFIED ROYALTY | BANK RAKYAT vs. Charter Communications |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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