Correlation Between DBS Group and Bank Mandiri

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

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

Diversification Opportunities for DBS Group and Bank Mandiri

-0.8

Correlation Coefficient

DBS Group  Bank Mandiri

Pay attention - limited upside

The 3 months correlation between DBS and Bank is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding DBS Group Holdings 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 DBS Group 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 DBS Group Holdings 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 DBS Group i.e., DBS Group and Bank Mandiri go up and down completely randomly.

Pair Corralation between DBS Group and Bank Mandiri

Assuming the 90 days horizon DBS Group Holdings is expected to generate 0.48 times more return on investment than Bank Mandiri. However, DBS Group Holdings is 2.07 times less risky than Bank Mandiri. It trades about 0.16 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.27 per unit of risk. If you would invest  12,361  in DBS Group Holdings on September 27, 2024 and sell it today you would earn a total of  441.00  from holding DBS Group Holdings or generate 3.57% return on investment over 90 days.

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

DBS Group Holdings  vs.  Bank Mandiri Persero

DBS Group Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DBS Group Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, DBS Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bank Mandiri Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Mandiri Persero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DBS Group and Bank Mandiri

The main advantage of trading using opposite DBS Group and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DBS Group 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 DBS Group Holdings 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.