Correlation Between Bank Rakyat and Wendys

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

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

Diversification Opportunities for Bank Rakyat and Wendys

-0.48

Correlation Coefficient

Bank Rakyat  Wendys

Very good diversification

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

Pair Corralation between Bank Rakyat and Wendys

Assuming the 90 days horizon Bank Rakyat is expected to under-perform the Wendys. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Rakyat is 1.11 times less risky than Wendys. The pink sheet trades about -0.16 of its potential returns per unit of risk. The The Wendys Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,666  in The Wendys Co on August 30, 2024 and sell it today you would earn a total of  187.00  from holding The Wendys Co or generate 11.22% 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  vs.  The Wendys Co

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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

The Wendys

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Wendys Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Wendys may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Bank Rakyat and Wendys

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

The idea behind Bank Rakyat and The Wendys Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.