Correlation Between Mandala Multifinance and Dana Brata

Can any of the company-specific risk be diversified away by investing in both Mandala Multifinance and Dana Brata 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 Dana Brata 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 Dana Brata Luhur, you can compare the effects of market volatilities on Mandala Multifinance and Dana Brata 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 Dana Brata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mandala Multifinance and Dana Brata.

Diversification Opportunities for Mandala Multifinance and Dana Brata

0.22

Correlation Coefficient

Mandala Multifinance  Dana Brata

Modest diversification

The 3 months correlation between Mandala and Dana is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mandala Multifinance Tbk and Dana Brata Luhur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Brata Luhur 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 Dana Brata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Brata Luhur has no effect on the direction of Mandala Multifinance i.e., Mandala Multifinance and Dana Brata go up and down completely randomly.

Pair Corralation between Mandala Multifinance and Dana Brata

Assuming the 90 days trading horizon Mandala Multifinance is expected to generate 1.75 times less return on investment than Dana Brata. But when comparing it to its historical volatility, Mandala Multifinance Tbk is 1.05 times less risky than Dana Brata. It trades about 0.04 of its potential returns per unit of risk. Dana Brata Luhur is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  62,500  in Dana Brata Luhur on December 30, 2024 and sell it today you would earn a total of  9,000  from holding Dana Brata Luhur or generate 14.4% return on investment over 90 days.

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

Mandala Multifinance Tbk  vs.  Dana Brata Luhur

Mandala Multifinance Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mandala Multifinance Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mandala Multifinance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dana Brata Luhur

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Brata Luhur are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Dana Brata disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mandala Multifinance and Dana Brata

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

The idea behind Mandala Multifinance Tbk and Dana Brata Luhur 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.