Correlation Between CARSALES and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both CARSALES 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 CARSALES and BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and BANK RAKYAT IND, you can compare the effects of market volatilities on CARSALES 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 CARSALES with a short position of BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALES and BANK RAKYAT.
Diversification Opportunities for CARSALES and BANK RAKYAT
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CARSALES and BANK is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALES 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 CARSALESCOM 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 CARSALES i.e., CARSALES and BANK RAKYAT go up and down completely randomly.
Pair Corralation between CARSALES and BANK RAKYAT
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.83 times more return on investment than BANK RAKYAT. However, CARSALESCOM is 1.21 times less risky than BANK RAKYAT. It trades about 0.11 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.06 per unit of risk. If you would invest 1,780 in CARSALESCOM on September 3, 2024 and sell it today you would earn a total of 780.00 from holding CARSALESCOM or generate 43.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CARSALESCOM vs. BANK RAKYAT IND
Performance |
| Timeline |
| CARSALESCOM |
| BANK RAKYAT IND |
CARSALES and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALES and BANK RAKYAT
The main advantage of trading using opposite CARSALES and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALES 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.| CARSALES vs. COMBA TELECOM SYST | CARSALES vs. SENECA FOODS A | CARSALES vs. Entravision Communications | CARSALES vs. JJ SNACK FOODS |
| BANK RAKYAT vs. INFORMATION SVC GRP | BANK RAKYAT vs. Datang International Power | BANK RAKYAT vs. CENTURIA OFFICE REIT | BANK RAKYAT vs. Autohome ADR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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