Correlation Between Direct Line and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both Direct Line 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 Direct Line and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Direct Line Insurance and BANK RAKYAT IND, you can compare the effects of market volatilities on Direct Line 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 Direct Line with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Line and BANK RAKYAT.
Diversification Opportunities for Direct Line and BANK RAKYAT
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Direct and BANK is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Direct Line Insurance 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 Direct Line 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 Direct Line Insurance 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 Direct Line i.e., Direct Line and BANK RAKYAT go up and down completely randomly.
Pair Corralation between Direct Line and BANK RAKYAT
Assuming the 90 days trading horizon Direct Line Insurance is expected to generate 0.48 times more return on investment than BANK RAKYAT. However, Direct Line Insurance is 2.08 times less risky than BANK RAKYAT. It trades about 0.12 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.15 per unit of risk. If you would invest 299.00 in Direct Line Insurance on October 11, 2024 and sell it today you would earn a total of 9.00 from holding Direct Line Insurance or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Direct Line Insurance vs. BANK RAKYAT IND
Performance |
| Timeline |
| Direct Line Insurance |
| BANK RAKYAT IND |
Direct Line and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Direct Line and BANK RAKYAT
The main advantage of trading using opposite Direct Line and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Direct Line 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.| Direct Line vs. Sinopec Shanghai Petrochemical | Direct Line vs. X FAB Silicon Foundries | Direct Line vs. SILICON LABORATOR | Direct Line vs. China BlueChemical |
| BANK RAKYAT vs. BANK OF CHINA | BANK RAKYAT vs. Direct Line Insurance | BANK RAKYAT vs. Erste Group Bank | BANK RAKYAT vs. Guangdong Investment Limited |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |