Correlation Between Public Company and Bank Mandiri

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

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

Diversification Opportunities for Public Company and Bank Mandiri

-0.08

Correlation Coefficient

Public Company  Bank Mandiri

Good diversification

The 3 months correlation between Public and Bank is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Public Company Management 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 Public Company 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 Public Company Management 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 Public Company i.e., Public Company and Bank Mandiri go up and down completely randomly.

Pair Corralation between Public Company and Bank Mandiri

Given the investment horizon of 90 days Public Company Management is expected to generate 13.22 times more return on investment than Bank Mandiri. However, Public Company is 13.22 times more volatile than Bank Mandiri Persero. It trades about 0.07 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.03 per unit of risk. If you would invest  11.00  in Public Company Management on October 5, 2024 and sell it today you would earn a total of  9.00  from holding Public Company Management or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	89.87%
Values	Daily Returns

Public Company Management  vs.  Bank Mandiri Persero

Public Management

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Public Company Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Public Company exhibited solid returns over the last few months and may actually be approaching a breakup point.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Public Company and Bank Mandiri

The main advantage of trading using opposite Public Company and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Public Company 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 Public Company Management 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.