Correlation Between BANK RAKYAT and Walt Disney

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

Diversification Opportunities for BANK RAKYAT and Walt Disney

-0.63

Correlation Coefficient

BANK RAKYAT  Walt Disney

Excellent diversification

The 3 months correlation between BANK and Walt is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Walt Disney go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Walt Disney

Assuming the 90 days trading horizon BANK RAKYAT is expected to generate 2.27 times less return on investment than Walt Disney. In addition to that, BANK RAKYAT is 1.55 times more volatile than The Walt Disney. It trades about 0.01 of its total potential returns per unit of risk. The Walt Disney is currently generating about 0.03 per unit of volatility. If you would invest  9,174  in The Walt Disney on August 17, 2024 and sell it today you would earn a total of  1,608  from holding The Walt Disney or generate 17.53% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  The Walt Disney

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 rather sound technical and fundamental indicators, BANK RAKYAT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Walt Disney

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Walt Disney are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Walt Disney reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK RAKYAT and Walt Disney

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

The idea behind BANK RAKYAT IND and The Walt Disney 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.