Correlation Between Bank Rakyat and Margo Caribe
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Margo Caribe 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 Bank Rakyat and Margo Caribe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and Margo Caribe, you can compare the effects of market volatilities on Bank Rakyat and Margo Caribe 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 Bank Rakyat with a short position of Margo Caribe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Margo Caribe.
Diversification Opportunities for Bank Rakyat and Margo Caribe
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Margo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Margo Caribe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Margo Caribe and Bank Rakyat 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 Bank Rakyat are associated (or correlated) with Margo Caribe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Margo Caribe has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Margo Caribe go up and down completely randomly.
Pair Corralation between Bank Rakyat and Margo Caribe
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Margo Caribe. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 54.99 times less risky than Margo Caribe. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Margo Caribe is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 355.00 in Margo Caribe on October 6, 2024 and sell it today you would earn a total of 110.00 from holding Margo Caribe or generate 30.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Rakyat vs. Margo Caribe
Performance |
Timeline |
Bank Rakyat |
Margo Caribe |
Bank Rakyat and Margo Caribe Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Rakyat and Margo Caribe
The main advantage of trading using opposite Bank Rakyat and Margo Caribe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Margo Caribe 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 Margo Caribe will offset losses from the drop in Margo Caribe's long position.Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Eurobank Ergasias Services | Bank Rakyat vs. Nedbank Group | Bank Rakyat vs. Standard Bank Group |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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