Correlation Between Bank Rakyat and Ledyard Financial

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

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

Diversification Opportunities for Bank Rakyat and Ledyard Financial

-0.68

Correlation Coefficient

Bank Rakyat  Ledyard Financial

Excellent diversification

The 3 months correlation between Bank and Ledyard is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Ledyard Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledyard 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 are associated (or correlated) with Ledyard Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledyard Financial has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Ledyard Financial go up and down completely randomly.

Pair Corralation between Bank Rakyat and Ledyard Financial

Assuming the 90 days horizon Bank Rakyat is expected to generate 3.23 times more return on investment than Ledyard Financial. However, Bank Rakyat is 3.23 times more volatile than Ledyard Financial Group. It trades about 0.05 of its potential returns per unit of risk. Ledyard Financial Group is currently generating about -0.49 per unit of risk. If you would invest  1,288  in Bank Rakyat on October 26, 2024 and sell it today you would earn a total of  27.00  from holding Bank Rakyat or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Bank Rakyat  vs.  Ledyard Financial Group

Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ledyard Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ledyard Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Ledyard Financial is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Rakyat and Ledyard Financial

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

The idea behind Bank Rakyat and Ledyard Financial Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.