Correlation Between Bank Mandiri and Phapros Tbk

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

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

Diversification Opportunities for Bank Mandiri and Phapros Tbk

0.66

Correlation Coefficient

Bank Mandiri  Phapros Tbk

Poor diversification

The 3 months correlation between Bank and Phapros is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Phapros Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phapros Tbk PT and Bank Mandiri 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 Mandiri Persero are associated (or correlated) with Phapros Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phapros Tbk PT has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Phapros Tbk go up and down completely randomly.

Pair Corralation between Bank Mandiri and Phapros Tbk

Assuming the 90 days trading horizon Bank Mandiri Persero is expected to generate 1.51 times more return on investment than Phapros Tbk. However, Bank Mandiri is 1.51 times more volatile than Phapros Tbk PT. It trades about -0.04 of its potential returns per unit of risk. Phapros Tbk PT is currently generating about -0.07 per unit of risk. If you would invest  570,000  in Bank Mandiri Persero on December 30, 2024 and sell it today you would lose (50,000) from holding Bank Mandiri Persero or give up 8.77% of portfolio value over 90 days.

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

Bank Mandiri Persero  vs.  Phapros Tbk PT

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Phapros Tbk PT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Phapros Tbk PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bank Mandiri and Phapros Tbk

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

The idea behind Bank Mandiri Persero and Phapros Tbk PT 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.