Correlation Between Bank Mandiri and AIB Acquisition

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

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

Diversification Opportunities for Bank Mandiri and AIB Acquisition

0.0

Correlation Coefficient

Bank Mandiri  AIB Acquisition

Pay attention - limited upside

The 3 months correlation between Bank and AIB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and AIB Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIB Acquisition Corp and Bank Mandiri 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 Bank Mandiri Persero are associated (or correlated) with AIB Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIB Acquisition Corp has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and AIB Acquisition go up and down completely randomly.

Pair Corralation between Bank Mandiri and AIB Acquisition

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 43.26 times more return on investment than AIB Acquisition. However, Bank Mandiri is 43.26 times more volatile than AIB Acquisition Corp. It trades about 0.06 of its potential returns per unit of risk. AIB Acquisition Corp is currently generating about 0.14 per unit of risk. If you would invest  29.00  in Bank Mandiri Persero on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Bank Mandiri Persero or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	28.51%
Values	Daily Returns

Bank Mandiri Persero  vs.  AIB Acquisition Corp

Bank Mandiri Persero

Risk-Adjusted Performance

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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.

AIB Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIB Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, AIB Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank Mandiri and AIB Acquisition

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

The idea behind Bank Mandiri Persero and AIB Acquisition Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.