Correlation Between Bank Rakyat and West Shore
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and West Shore 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 West Shore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat and West Shore Bank, you can compare the effects of market volatilities on Bank Rakyat and West Shore 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 West Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and West Shore.
Diversification Opportunities for Bank Rakyat and West Shore
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and West is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and West Shore Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Shore Bank 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 West Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Shore Bank has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and West Shore go up and down completely randomly.
Pair Corralation between Bank Rakyat and West Shore
Assuming the 90 days horizon Bank Rakyat is expected to under-perform the West Shore. In addition to that, Bank Rakyat is 1.96 times more volatile than West Shore Bank. It trades about -0.02 of its total potential returns per unit of risk. West Shore Bank is currently generating about 0.05 per unit of volatility. If you would invest 2,405 in West Shore Bank on September 23, 2024 and sell it today you would earn a total of 120.00 from holding West Shore Bank or generate 4.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 98.43% |
Values | Daily Returns |
Bank Rakyat vs. West Shore Bank
Performance |
Timeline |
Bank Rakyat |
West Shore Bank |
Bank Rakyat and West Shore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Rakyat and West Shore
The main advantage of trading using opposite Bank Rakyat and West Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, West Shore 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 West Shore will offset losses from the drop in West Shore's long position.Bank Rakyat vs. Banco Bradesco SA | Bank Rakyat vs. Itau Unibanco Banco | Bank Rakyat vs. Lloyds Banking Group | Bank Rakyat vs. Deutsche Bank AG |
West Shore vs. Banco Bradesco SA | West Shore vs. Itau Unibanco Banco | West Shore vs. Lloyds Banking Group | West Shore vs. Deutsche Bank AG |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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