Correlation Between BANK RAKYAT and Mitsubishi UFJ

Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Mitsubishi UFJ 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 Mitsubishi UFJ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK RAKYAT IND and Mitsubishi UFJ Financial, you can compare the effects of market volatilities on BANK RAKYAT and Mitsubishi UFJ 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 Mitsubishi UFJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Mitsubishi UFJ.

Diversification Opportunities for BANK RAKYAT and Mitsubishi UFJ

-0.42

Correlation Coefficient

BANK RAKYAT  Mitsubishi UFJ

Very good diversification

The 3 months correlation between BANK and Mitsubishi is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Mitsubishi UFJ Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsubishi UFJ Financial 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 IND are associated (or correlated) with Mitsubishi UFJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsubishi UFJ Financial has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Mitsubishi UFJ go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Mitsubishi UFJ

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Mitsubishi UFJ. In addition to that, BANK RAKYAT is 7.08 times more volatile than Mitsubishi UFJ Financial. It trades about -0.05 of its total potential returns per unit of risk. Mitsubishi UFJ Financial is currently generating about 0.04 per unit of volatility. If you would invest  1,205  in Mitsubishi UFJ Financial on December 5, 2024 and sell it today you would earn a total of  10.00  from holding Mitsubishi UFJ Financial or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BANK RAKYAT IND  vs.  Mitsubishi UFJ Financial

BANK RAKYAT IND

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK RAKYAT IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Mitsubishi UFJ Financial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi UFJ Financial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Mitsubishi UFJ may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BANK RAKYAT and Mitsubishi UFJ

The main advantage of trading using opposite BANK RAKYAT and Mitsubishi UFJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Mitsubishi UFJ 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 Mitsubishi UFJ will offset losses from the drop in Mitsubishi UFJ's long position.

The idea behind BANK RAKYAT IND and Mitsubishi UFJ Financial 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.