Correlation Between BANK RAKYAT and Neste Oyj
Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and Neste Oyj 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 Neste Oyj 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 Neste Oyj, you can compare the effects of market volatilities on BANK RAKYAT and Neste Oyj 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 Neste Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and Neste Oyj.
Diversification Opportunities for BANK RAKYAT and Neste Oyj
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BANK and Neste is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Neste Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neste Oyj 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 Neste Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neste Oyj has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Neste Oyj go up and down completely randomly.
Pair Corralation between BANK RAKYAT and Neste Oyj
Assuming the 90 days trading horizon BANK RAKYAT IND is expected to generate 0.6 times more return on investment than Neste Oyj. However, BANK RAKYAT IND is 1.67 times less risky than Neste Oyj. It trades about -0.15 of its potential returns per unit of risk. Neste Oyj is currently generating about -0.23 per unit of risk. If you would invest 26.00 in BANK RAKYAT IND on December 4, 2024 and sell it today you would lose (4.00) from holding BANK RAKYAT IND or give up 15.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
BANK RAKYAT IND vs. Neste Oyj
Performance |
Timeline |
BANK RAKYAT IND |
Neste Oyj |
BANK RAKYAT and Neste Oyj Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BANK RAKYAT and Neste Oyj
The main advantage of trading using opposite BANK RAKYAT and Neste Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK RAKYAT position performs unexpectedly, Neste Oyj 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 Neste Oyj will offset losses from the drop in Neste Oyj's long position.BANK RAKYAT vs. Adtalem Global Education | BANK RAKYAT vs. Perdoceo Education | BANK RAKYAT vs. Strategic Education | BANK RAKYAT vs. betterU Education Corp |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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