Correlation Between Bank Sinarmas and Bank Mayapada

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

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

Diversification Opportunities for Bank Sinarmas and Bank Mayapada

-0.51

Correlation Coefficient

Bank Sinarmas  Bank Mayapada

Excellent diversification

The 3 months correlation between Bank and Bank is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bank Sinarmas Tbk and Bank Mayapada Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mayapada Intern and Bank Sinarmas 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 Sinarmas Tbk are associated (or correlated) with Bank Mayapada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mayapada Intern has no effect on the direction of Bank Sinarmas i.e., Bank Sinarmas and Bank Mayapada go up and down completely randomly.

Pair Corralation between Bank Sinarmas and Bank Mayapada

Assuming the 90 days trading horizon Bank Sinarmas Tbk is expected to generate 0.52 times more return on investment than Bank Mayapada. However, Bank Sinarmas Tbk is 1.91 times less risky than Bank Mayapada. It trades about 0.06 of its potential returns per unit of risk. Bank Mayapada Internasional is currently generating about -0.08 per unit of risk. If you would invest  82,000  in Bank Sinarmas Tbk on December 29, 2024 and sell it today you would earn a total of  3,500  from holding Bank Sinarmas Tbk or generate 4.27% return on investment over 90 days.

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

Bank Sinarmas Tbk  vs.  Bank Mayapada Internasional

Bank Sinarmas Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Sinarmas Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bank Sinarmas is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bank Mayapada Intern

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Mayapada Internasional 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 Sinarmas and Bank Mayapada

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

The idea behind Bank Sinarmas Tbk and Bank Mayapada Internasional 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.