Correlation Between Alfa Financial and BANK MANDIRI

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

By analyzing existing cross correlation between Alfa Financial Software and BANK MANDIRI, you can compare the effects of market volatilities on Alfa Financial and BANK MANDIRI 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 Alfa Financial with a short position of BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alfa Financial and BANK MANDIRI.

Diversification Opportunities for Alfa Financial and BANK MANDIRI

-0.15

Correlation Coefficient

Alfa Financial  BANK MANDIRI

Good diversification

The 3 months correlation between Alfa and BANK is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Alfa Financial Software and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and Alfa Financial 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 Alfa Financial Software are associated (or correlated) with BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of Alfa Financial i.e., Alfa Financial and BANK MANDIRI go up and down completely randomly.

Pair Corralation between Alfa Financial and BANK MANDIRI

Assuming the 90 days trading horizon Alfa Financial Software is expected to under-perform the BANK MANDIRI. But the stock apears to be less risky and, when comparing its historical volatility, Alfa Financial Software is 6.67 times less risky than BANK MANDIRI. The stock trades about -0.33 of its potential returns per unit of risk. The BANK MANDIRI is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  30.00  in BANK MANDIRI on October 22, 2024 and sell it today you would earn a total of  2.00  from holding BANK MANDIRI or generate 6.67% return on investment over 90 days.

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

Alfa Financial Software  vs.  BANK MANDIRI

Alfa Financial Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alfa Financial Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alfa Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Alfa Financial and BANK MANDIRI

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

The idea behind Alfa Financial Software and BANK MANDIRI 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.