Correlation Between North Dallas and Bank Mandiri

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

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

Diversification Opportunities for North Dallas and Bank Mandiri

-0.62

Correlation Coefficient

North Dallas  Bank Mandiri

Excellent diversification

The 3 months correlation between North and Bank is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding North Dallas Bank 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 North Dallas 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 North Dallas Bank 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 North Dallas i.e., North Dallas and Bank Mandiri go up and down completely randomly.

Pair Corralation between North Dallas and Bank Mandiri

Given the investment horizon of 90 days North Dallas Bank is expected to under-perform the Bank Mandiri. But the pink sheet apears to be less risky and, when comparing its historical volatility, North Dallas Bank is 1.35 times less risky than Bank Mandiri. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Bank Mandiri Persero is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,242  in Bank Mandiri Persero on October 5, 2024 and sell it today you would earn a total of  137.00  from holding Bank Mandiri Persero or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	67.62%
Values	Daily Returns

North Dallas Bank  vs.  Bank Mandiri Persero

North Dallas Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in North Dallas Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, North Dallas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the 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 North Dallas and Bank Mandiri

The main advantage of trading using opposite North Dallas and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Dallas 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 North Dallas Bank 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.