Correlation Between First Bankers and Bank Mandiri

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

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

Diversification Opportunities for First Bankers and Bank Mandiri

-0.65

Correlation Coefficient

First Bankers  Bank Mandiri

Excellent diversification

The 3 months correlation between First and Bank is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding First Bankers Trustshares 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 First Bankers 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 First Bankers Trustshares 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 First Bankers i.e., First Bankers and Bank Mandiri go up and down completely randomly.

Pair Corralation between First Bankers and Bank Mandiri

Given the investment horizon of 90 days First Bankers Trustshares is expected to under-perform the Bank Mandiri. In addition to that, First Bankers is 1.97 times more volatile than Bank Mandiri Persero. It trades about -0.01 of its total potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.02 per unit of volatility. If you would invest  1,221  in Bank Mandiri Persero on October 5, 2024 and sell it today you would earn a total of  158.00  from holding Bank Mandiri Persero or generate 12.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.17%
Values	Daily Returns

First Bankers Trustshares  vs.  Bank Mandiri Persero

First Bankers Trustshares

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in First Bankers Trustshares are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, First Bankers is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with First Bankers and Bank Mandiri

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

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.