Correlation Between BURLINGTON STORES and BANK MANDIRI

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

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

Diversification Opportunities for BURLINGTON STORES and BANK MANDIRI

-0.76

Correlation Coefficient

BURLINGTON STORES  BANK MANDIRI

Pay attention - limited upside

The 3 months correlation between BURLINGTON and BANK is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding BURLINGTON STORES and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and BURLINGTON STORES 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 BURLINGTON STORES 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 has no effect on the direction of BURLINGTON STORES i.e., BURLINGTON STORES and BANK MANDIRI go up and down completely randomly.

Pair Corralation between BURLINGTON STORES and BANK MANDIRI

Assuming the 90 days trading horizon BURLINGTON STORES is expected to generate 1.1 times more return on investment than BANK MANDIRI. However, BURLINGTON STORES is 1.1 times more volatile than BANK MANDIRI. It trades about 0.03 of its potential returns per unit of risk. BANK MANDIRI is currently generating about 0.03 per unit of risk. If you would invest  20,600  in BURLINGTON STORES on October 5, 2024 and sell it today you would earn a total of  6,800  from holding BURLINGTON STORES or generate 33.01% return on investment over 90 days.

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

BURLINGTON STORES  vs.  BANK MANDIRI

BURLINGTON STORES

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days BURLINGTON STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, BURLINGTON STORES exhibited solid returns over the last few months and may actually be approaching a breakup point.

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BURLINGTON STORES and BANK MANDIRI

The main advantage of trading using opposite BURLINGTON STORES and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BURLINGTON STORES 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 BURLINGTON STORES and BANK MANDIRI 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.