Correlation Between Bank Rakyat and Liberty Media

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

By analyzing existing cross correlation between Bank Rakyat and Liberty Media, you can compare the effects of market volatilities on Bank Rakyat and Liberty Media 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 Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Liberty Media.

Diversification Opportunities for Bank Rakyat and Liberty Media

-0.55

Correlation Coefficient

Bank Rakyat  Liberty Media

Excellent diversification

The 3 months correlation between Bank and Liberty is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media 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 Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Liberty Media go up and down completely randomly.

Pair Corralation between Bank Rakyat and Liberty Media

If you would invest  2,251  in Liberty Media on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Liberty Media or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Bank Rakyat  vs.  Liberty Media

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 fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Liberty Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Liberty Media is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Rakyat and Liberty Media

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

The idea behind Bank Rakyat and Liberty Media 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.