Correlation Between Raiffeisen Bank and Intercorp Financial

Can any of the company-specific risk be diversified away by investing in both Raiffeisen Bank and Intercorp Financial 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 Raiffeisen Bank and Intercorp Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Raiffeisen Bank International and Intercorp Financial Services, you can compare the effects of market volatilities on Raiffeisen Bank and Intercorp Financial 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 Raiffeisen Bank with a short position of Intercorp Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Raiffeisen Bank and Intercorp Financial.

Diversification Opportunities for Raiffeisen Bank and Intercorp Financial

-0.09

Correlation Coefficient

Raiffeisen Bank  Intercorp Financial

Good diversification

The 3 months correlation between Raiffeisen and Intercorp is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Raiffeisen Bank International and Intercorp Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercorp Financial and Raiffeisen Bank 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 Raiffeisen Bank International are associated (or correlated) with Intercorp Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercorp Financial has no effect on the direction of Raiffeisen Bank i.e., Raiffeisen Bank and Intercorp Financial go up and down completely randomly.

Pair Corralation between Raiffeisen Bank and Intercorp Financial

Assuming the 90 days horizon Raiffeisen Bank is expected to generate 2.7 times less return on investment than Intercorp Financial. In addition to that, Raiffeisen Bank is 2.63 times more volatile than Intercorp Financial Services. It trades about 0.03 of its total potential returns per unit of risk. Intercorp Financial Services is currently generating about 0.19 per unit of volatility. If you would invest  2,451  in Intercorp Financial Services on September 20, 2024 and sell it today you would earn a total of  425.00  from holding Intercorp Financial Services or generate 17.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Raiffeisen Bank International  vs.  Intercorp Financial Services

Raiffeisen Bank Inte

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Raiffeisen Bank International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Raiffeisen Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Intercorp Financial

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intercorp Financial Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent technical and fundamental indicators, Intercorp Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Raiffeisen Bank and Intercorp Financial

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

The idea behind Raiffeisen Bank International and Intercorp Financial Services 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.