Correlation Between Advanced Medical and BANK MANDIRI

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

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

Diversification Opportunities for Advanced Medical and BANK MANDIRI

-0.24

Correlation Coefficient

Advanced Medical  BANK MANDIRI

Very good diversification

The 3 months correlation between Advanced and BANK is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Medical Solutions and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and Advanced Medical 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 Advanced Medical Solutions 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 Advanced Medical i.e., Advanced Medical and BANK MANDIRI go up and down completely randomly.

Pair Corralation between Advanced Medical and BANK MANDIRI

Assuming the 90 days trading horizon Advanced Medical Solutions is expected to generate 1.29 times more return on investment than BANK MANDIRI. However, Advanced Medical is 1.29 times more volatile than BANK MANDIRI. It trades about -0.03 of its potential returns per unit of risk. BANK MANDIRI is currently generating about -0.12 per unit of risk. If you would invest  246.00  in Advanced Medical Solutions on December 23, 2024 and sell it today you would lose (16.00) from holding Advanced Medical Solutions or give up 6.5% of portfolio value over 90 days.

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

Advanced Medical Solutions  vs.  BANK MANDIRI

Advanced Medical Sol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Advanced Medical Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Advanced Medical 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

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Advanced Medical and BANK MANDIRI

The main advantage of trading using opposite Advanced Medical and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical 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 Advanced Medical Solutions 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.