Correlation Between Trust Finance and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both Trust Finance 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 Trust Finance and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trust Finance Indonesia and Bank Rakyat Indonesia, you can compare the effects of market volatilities on Trust Finance 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 Trust Finance with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trust Finance and Bank Rakyat.
Diversification Opportunities for Trust Finance and Bank Rakyat
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Trust and Bank is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Trust Finance Indonesia and Bank Rakyat Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat Indonesia and Trust Finance 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 Trust Finance Indonesia 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 Indonesia has no effect on the direction of Trust Finance i.e., Trust Finance and Bank Rakyat go up and down completely randomly.
Pair Corralation between Trust Finance and Bank Rakyat
Assuming the 90 days trading horizon Trust Finance Indonesia is expected to generate 1.67 times more return on investment than Bank Rakyat. However, Trust Finance is 1.67 times more volatile than Bank Rakyat Indonesia. It trades about 0.06 of its potential returns per unit of risk. Bank Rakyat Indonesia is currently generating about -0.03 per unit of risk. If you would invest 38,600 in Trust Finance Indonesia on October 24, 2024 and sell it today you would earn a total of 34,900 from holding Trust Finance Indonesia or generate 90.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Trust Finance Indonesia vs. Bank Rakyat Indonesia
Performance |
| Timeline |
| Trust Finance Indonesia |
| Bank Rakyat Indonesia |
Trust Finance and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trust Finance and Bank Rakyat
The main advantage of trading using opposite Trust Finance and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trust Finance 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.| Trust Finance vs. Wahana Ottomitra Multiartha | Trust Finance vs. Yulie Sekurindo Tbk | Trust Finance vs. Trimegah Securities Tbk | Trust Finance vs. Mandala Multifinance Tbk |
| Bank Rakyat vs. Trimegah Securities Tbk | Bank Rakyat vs. Trust Finance Indonesia | Bank Rakyat vs. Panca Global Securities | Bank Rakyat vs. Wahana Ottomitra Multiartha |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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