Correlation Between DFS Furniture and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and BANK RAKYAT IND, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and BANK RAKYAT.
Diversification Opportunities for DFS Furniture and BANK RAKYAT
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DFS and BANK is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and BANK RAKYAT go up and down completely randomly.
Pair Corralation between DFS Furniture and BANK RAKYAT
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.94 times more return on investment than BANK RAKYAT. However, DFS Furniture PLC is 1.06 times less risky than BANK RAKYAT. It trades about 0.28 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.21 per unit of risk. If you would invest 151.00 in DFS Furniture PLC on September 12, 2024 and sell it today you would earn a total of 15.00 from holding DFS Furniture PLC or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
DFS Furniture PLC vs. BANK RAKYAT IND
Performance |
| Timeline |
| DFS Furniture PLC |
| BANK RAKYAT IND |
DFS Furniture and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and BANK RAKYAT
The main advantage of trading using opposite DFS Furniture and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| BANK RAKYAT vs. ALGOMA STEEL GROUP | BANK RAKYAT vs. CVW CLEANTECH INC | BANK RAKYAT vs. ULTRA CLEAN HLDGS | BANK RAKYAT vs. United States Steel |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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