Correlation Between Bank Mandiri and Astra Space

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

Diversification Opportunities for Bank Mandiri and Astra Space

0.69

Correlation Coefficient

Bank Mandiri  Astra Space

Poor diversification

The 3 months correlation between Bank and Astra is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Astra Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Space 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 Astra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Space has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Astra Space go up and down completely randomly.

Pair Corralation between Bank Mandiri and Astra Space

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 1.83 times more return on investment than Astra Space. However, Bank Mandiri is 1.83 times more volatile than Astra Space. It trades about 0.06 of its potential returns per unit of risk. Astra Space is currently generating about -0.05 per unit of risk. If you would invest  28.00  in Bank Mandiri Persero on September 3, 2024 and sell it today you would earn a total of  15.00  from holding Bank Mandiri Persero or generate 53.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.04%
Values	Daily Returns

Bank Mandiri Persero  vs.  Astra Space

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 nearly stable basic indicators, Bank Mandiri is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Astra Space

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Space has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Astra Space is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Mandiri and Astra Space

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

The idea behind Bank Mandiri Persero and Astra Space 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.