Correlation Between BANK RAKYAT and UNIVERSAL DISPLAY

Can any of the company-specific risk be diversified away by investing in both BANK RAKYAT and UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY, you can compare the effects of market volatilities on BANK RAKYAT and UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK RAKYAT and UNIVERSAL DISPLAY.

Diversification Opportunities for BANK RAKYAT and UNIVERSAL DISPLAY

0.88

Correlation Coefficient

BANK RAKYAT  UNIVERSAL DISPLAY

Very poor diversification

The 3 months correlation between BANK and UNIVERSAL is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL DISPLAY has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and UNIVERSAL DISPLAY go up and down completely randomly.

Pair Corralation between BANK RAKYAT and UNIVERSAL DISPLAY

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the UNIVERSAL DISPLAY. But the stock apears to be less risky and, when comparing its historical volatility, BANK RAKYAT IND is 1.14 times less risky than UNIVERSAL DISPLAY. The stock trades about -0.01 of its potential returns per unit of risk. The UNIVERSAL DISPLAY is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,515  in UNIVERSAL DISPLAY on October 10, 2024 and sell it today you would earn a total of  3,520  from holding UNIVERSAL DISPLAY or generate 30.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

BANK RAKYAT IND  vs.  UNIVERSAL DISPLAY

BANK RAKYAT IND

Risk-Adjusted Performance

0 of 100

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UNIVERSAL DISPLAY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNIVERSAL DISPLAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BANK RAKYAT and UNIVERSAL DISPLAY

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

The idea behind BANK RAKYAT IND and UNIVERSAL DISPLAY 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.