Correlation Between Bank of the Philippine Is and Bank Mandiri

Can any of the company-specific risk be diversified away by investing in both Bank of the Philippine Is 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 of the Philippine Is 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 of the and Bank Mandiri Persero, you can compare the effects of market volatilities on Bank of the Philippine Is 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 of the Philippine Is with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the Philippine Is and Bank Mandiri.

Diversification Opportunities for Bank of the Philippine Is and Bank Mandiri

-0.48

Correlation Coefficient

Bank of the Philippine Is  Bank Mandiri

Very good diversification

The 3 months correlation between Bank and Bank is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the 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 of the Philippine Is 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 of the 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 of the Philippine Is i.e., Bank of the Philippine Is and Bank Mandiri go up and down completely randomly.

Pair Corralation between Bank of the Philippine Is and Bank Mandiri

Assuming the 90 days horizon Bank of the is expected to generate 0.38 times more return on investment than Bank Mandiri. However, Bank of the is 2.64 times less risky than Bank Mandiri. It trades about 0.06 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.0 per unit of risk. If you would invest  4,375  in Bank of the on December 28, 2024 and sell it today you would earn a total of  309.00  from holding Bank of the or generate 7.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Bank of the  vs.  Bank Mandiri Persero

Bank of the Philippine Is

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of the are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Bank of the Philippine Is may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 nearly stable basic indicators, Bank Mandiri is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank of the Philippine Is and Bank Mandiri

The main advantage of trading using opposite Bank of the Philippine Is and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the Philippine Is 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 of the 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.