Correlation Between Mandala Multifinance and Paninvest Tbk

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

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

Diversification Opportunities for Mandala Multifinance and Paninvest Tbk

0.7

Correlation Coefficient

Mandala Multifinance  Paninvest Tbk

Poor diversification

The 3 months correlation between Mandala and Paninvest is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mandala Multifinance Tbk and Paninvest Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paninvest Tbk and Mandala Multifinance 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 Mandala Multifinance Tbk are associated (or correlated) with Paninvest Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paninvest Tbk has no effect on the direction of Mandala Multifinance i.e., Mandala Multifinance and Paninvest Tbk go up and down completely randomly.

Pair Corralation between Mandala Multifinance and Paninvest Tbk

Assuming the 90 days trading horizon Mandala Multifinance Tbk is expected to generate 2.48 times more return on investment than Paninvest Tbk. However, Mandala Multifinance is 2.48 times more volatile than Paninvest Tbk. It trades about 0.22 of its potential returns per unit of risk. Paninvest Tbk is currently generating about 0.12 per unit of risk. If you would invest  142,105  in Mandala Multifinance Tbk on September 13, 2024 and sell it today you would earn a total of  192,895  from holding Mandala Multifinance Tbk or generate 135.74% return on investment over 90 days.

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

Mandala Multifinance Tbk  vs.  Paninvest Tbk

Mandala Multifinance Tbk

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mandala Multifinance Tbk are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mandala Multifinance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Paninvest Tbk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paninvest Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paninvest Tbk disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mandala Multifinance and Paninvest Tbk

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

The idea behind Mandala Multifinance Tbk and Paninvest Tbk 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.