Correlation Between ScanSource and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both ScanSource 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 ScanSource and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ScanSource and BANK RAKYAT IND, you can compare the effects of market volatilities on ScanSource 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 ScanSource with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ScanSource and BANK RAKYAT.
Diversification Opportunities for ScanSource and BANK RAKYAT
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ScanSource and BANK is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding ScanSource 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 ScanSource 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 ScanSource 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 ScanSource i.e., ScanSource and BANK RAKYAT go up and down completely randomly.
Pair Corralation between ScanSource and BANK RAKYAT
Assuming the 90 days horizon ScanSource is expected to generate 1.33 times less return on investment than BANK RAKYAT. But when comparing it to its historical volatility, ScanSource is 1.47 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 0.11 of returns per unit of risk over similar time horizon. If you would invest 22.00 in BANK RAKYAT IND on October 30, 2024 and sell it today you would earn a total of 1.00 from holding BANK RAKYAT IND or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ScanSource vs. BANK RAKYAT IND
Performance |
| Timeline |
| ScanSource |
| BANK RAKYAT IND |
ScanSource and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ScanSource and BANK RAKYAT
The main advantage of trading using opposite ScanSource and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ScanSource 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.| ScanSource vs. MAGNUM MINING EXP | ScanSource vs. ARDAGH METAL PACDL 0001 | ScanSource vs. Perseus Mining Limited | ScanSource vs. SILICON LABORATOR |
| BANK RAKYAT vs. UNITED UTILITIES GR | BANK RAKYAT vs. Amkor Technology | BANK RAKYAT vs. Wayside Technology Group | BANK RAKYAT vs. Magnachip Semiconductor |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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