Correlation Between Bank Mestika and Bank Sinarmas

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

By analyzing existing cross correlation between Bank Mestika Dharma and Bank Sinarmas Tbk, you can compare the effects of market volatilities on Bank Mestika and Bank Sinarmas 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 Mestika with a short position of Bank Sinarmas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mestika and Bank Sinarmas.

Diversification Opportunities for Bank Mestika and Bank Sinarmas

-0.75

Correlation Coefficient

Bank Mestika  Bank Sinarmas

Pay attention - limited upside

The 3 months correlation between Bank and Bank is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mestika Dharma and Bank Sinarmas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Sinarmas Tbk and Bank Mestika 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 Mestika Dharma are associated (or correlated) with Bank Sinarmas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Sinarmas Tbk has no effect on the direction of Bank Mestika i.e., Bank Mestika and Bank Sinarmas go up and down completely randomly.

Pair Corralation between Bank Mestika and Bank Sinarmas

Assuming the 90 days trading horizon Bank Mestika Dharma is expected to under-perform the Bank Sinarmas. But the stock apears to be less risky and, when comparing its historical volatility, Bank Mestika Dharma is 1.31 times less risky than Bank Sinarmas. The stock trades about -0.1 of its potential returns per unit of risk. The Bank Sinarmas Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  72,500  in Bank Sinarmas Tbk on December 2, 2024 and sell it today you would earn a total of  11,500  from holding Bank Sinarmas Tbk or generate 15.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Bank Mestika Dharma  vs.  Bank Sinarmas Tbk

Bank Mestika Dharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Mestika Dharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bank Sinarmas Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Sinarmas Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Sinarmas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mestika and Bank Sinarmas

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

The idea behind Bank Mestika Dharma and Bank Sinarmas Tbk 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.