Correlation Between Air Transport and BANK MANDIRI

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

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

Diversification Opportunities for Air Transport and BANK MANDIRI

-0.36

Correlation Coefficient

Air Transport  BANK MANDIRI

Very good diversification

The 3 months correlation between Air and BANK is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Air Transport Services and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and Air Transport 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 Air Transport Services 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 Air Transport i.e., Air Transport and BANK MANDIRI go up and down completely randomly.

Pair Corralation between Air Transport and BANK MANDIRI

Assuming the 90 days horizon Air Transport Services is expected to generate 1.1 times more return on investment than BANK MANDIRI. However, Air Transport is 1.1 times more volatile than BANK MANDIRI. It trades about 0.13 of its potential returns per unit of risk. BANK MANDIRI is currently generating about -0.11 per unit of risk. If you would invest  1,420  in Air Transport Services on December 5, 2024 and sell it today you would earn a total of  700.00  from holding Air Transport Services or generate 49.3% return on investment over 90 days.

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

Air Transport Services  vs.  BANK MANDIRI

Air Transport Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Transport Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Air Transport is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 fragile 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 Air Transport and BANK MANDIRI

The main advantage of trading using opposite Air Transport and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Transport 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 Air Transport Services 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.