Correlation Between Tecsys and Bank Rakyat

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

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

Diversification Opportunities for Tecsys and Bank Rakyat

-0.91

Correlation Coefficient

Tecsys  Bank Rakyat

Pay attention - limited upside

The 3 months correlation between Tecsys and Bank is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Tecsys Inc and Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat and Tecsys 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 Tecsys Inc are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat has no effect on the direction of Tecsys i.e., Tecsys and Bank Rakyat go up and down completely randomly.

Pair Corralation between Tecsys and Bank Rakyat

Assuming the 90 days horizon Tecsys Inc is expected to generate 1.23 times more return on investment than Bank Rakyat. However, Tecsys is 1.23 times more volatile than Bank Rakyat. It trades about 0.0 of its potential returns per unit of risk. Bank Rakyat is currently generating about -0.21 per unit of risk. If you would invest  3,106  in Tecsys Inc on October 8, 2024 and sell it today you would lose (9.00) from holding Tecsys Inc or give up 0.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Tecsys Inc  vs.  Bank Rakyat

Tecsys Inc

Risk-Adjusted Performance

6 of 100

Modest

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

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Tecsys and Bank Rakyat

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

The idea behind Tecsys Inc and Bank Rakyat 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.