Correlation Between BANK RAKYAT and Linedata Services

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

Diversification Opportunities for BANK RAKYAT and Linedata Services

-0.48

Correlation Coefficient

BANK RAKYAT  Linedata Services

Very good diversification

The 3 months correlation between BANK and Linedata is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BANK RAKYAT IND and Linedata Services SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linedata Services 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 Linedata Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linedata Services has no effect on the direction of BANK RAKYAT i.e., BANK RAKYAT and Linedata Services go up and down completely randomly.

Pair Corralation between BANK RAKYAT and Linedata Services

Assuming the 90 days trading horizon BANK RAKYAT IND is expected to under-perform the Linedata Services. In addition to that, BANK RAKYAT is 2.0 times more volatile than Linedata Services SA. It trades about -0.06 of its total potential returns per unit of risk. Linedata Services SA is currently generating about 0.09 per unit of volatility. If you would invest  7,960  in Linedata Services SA on October 6, 2024 and sell it today you would earn a total of  380.00  from holding Linedata Services SA or generate 4.77% return on investment over 90 days.

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

BANK RAKYAT IND  vs.  Linedata Services SA

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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Linedata Services

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Linedata Services SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Linedata Services may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BANK RAKYAT and Linedata Services

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

The idea behind BANK RAKYAT IND and Linedata Services SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.