Correlation Between Bank Jabar and Bank Mandiri

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

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

Diversification Opportunities for Bank Jabar and Bank Mandiri

0.75

Correlation Coefficient

Bank Jabar  Bank Mandiri

Poor diversification

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 Jabar and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero and Bank Jabar 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 Jabar 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 Persero has no effect on the direction of Bank Jabar i.e., Bank Jabar and Bank Mandiri go up and down completely randomly.

Pair Corralation between Bank Jabar and Bank Mandiri

Assuming the 90 days trading horizon Bank Jabar is expected to under-perform the Bank Mandiri. But the stock apears to be less risky and, when comparing its historical volatility, Bank Jabar is 1.17 times less risky than Bank Mandiri. The stock trades about -0.33 of its potential returns per unit of risk. The Bank Mandiri Persero is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest  580,000  in Bank Mandiri Persero on December 4, 2024 and sell it today you would lose (86,000) from holding Bank Mandiri Persero or give up 14.83% of portfolio value over 90 days.

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

Bank Jabar  vs.  Bank Mandiri Persero

Bank Jabar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Jabar 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 Mandiri Persero

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Mandiri Persero 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.

Pair Trading with Bank Jabar and Bank Mandiri

The main advantage of trading using opposite Bank Jabar and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Jabar 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 Bank Jabar and Bank Mandiri Persero 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.