Correlation Between RSL Electronics and Ludan Engineering

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

By analyzing existing cross correlation between RSL Electronics and Ludan Engineering Co, you can compare the effects of market volatilities on RSL Electronics and Ludan Engineering 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 RSL Electronics with a short position of Ludan Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of RSL Electronics and Ludan Engineering.

Diversification Opportunities for RSL Electronics and Ludan Engineering

0.54

Correlation Coefficient

RSL Electronics  Ludan Engineering

Very weak diversification

The 3 months correlation between RSL and Ludan is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding RSL Electronics and Ludan Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ludan Engineering and RSL Electronics 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 RSL Electronics are associated (or correlated) with Ludan Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ludan Engineering has no effect on the direction of RSL Electronics i.e., RSL Electronics and Ludan Engineering go up and down completely randomly.

Pair Corralation between RSL Electronics and Ludan Engineering

Assuming the 90 days trading horizon RSL Electronics is expected to under-perform the Ludan Engineering. In addition to that, RSL Electronics is 1.78 times more volatile than Ludan Engineering Co. It trades about -0.06 of its total potential returns per unit of risk. Ludan Engineering Co is currently generating about 0.14 per unit of volatility. If you would invest  204,100  in Ludan Engineering Co on May 7, 2025 and sell it today you would earn a total of  37,400  from holding Ludan Engineering Co or generate 18.32% return on investment over 90 days.

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

RSL Electronics  vs.  Ludan Engineering Co

RSL Electronics

Risk-Adjusted Performance

Weakest

Over the last 90 days RSL Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ludan Engineering

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ludan Engineering Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ludan Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RSL Electronics and Ludan Engineering

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

The idea behind RSL Electronics and Ludan Engineering 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.