Correlation Between Spring Valley and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Spring Valley 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 Spring Valley and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and Bank Rakyat, you can compare the effects of market volatilities on Spring Valley 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 Spring Valley with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Bank Rakyat.
Diversification Opportunities for Spring Valley and Bank Rakyat
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spring and Bank is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Spring Valley 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 Spring Valley Acquisition 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 has no effect on the direction of Spring Valley i.e., Spring Valley and Bank Rakyat go up and down completely randomly.
Pair Corralation between Spring Valley and Bank Rakyat
Given the investment horizon of 90 days Spring Valley Acquisition is expected to generate 0.18 times more return on investment than Bank Rakyat. However, Spring Valley Acquisition is 5.61 times less risky than Bank Rakyat. It trades about -0.33 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.07 per unit of risk. If you would invest 1,145 in Spring Valley Acquisition on September 13, 2024 and sell it today you would lose (23.00) from holding Spring Valley Acquisition or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spring Valley Acquisition vs. Bank Rakyat
Performance |
| Timeline |
| Spring Valley Acquisition |
| Bank Rakyat |
Spring Valley and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spring Valley and Bank Rakyat
The main advantage of trading using opposite Spring Valley and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley 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.The idea behind Spring Valley Acquisition and Bank Rakyat pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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