Correlation Between Bank Mandiri and Bel Fuse

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

Diversification Opportunities for Bank Mandiri and Bel Fuse

0.29

Correlation Coefficient

Bank Mandiri  Bel Fuse

Modest diversification

The 3 months correlation between Bank and Bel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Bel Fuse B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bel Fuse B 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 Bel Fuse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bel Fuse B has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Bel Fuse go up and down completely randomly.

Pair Corralation between Bank Mandiri and Bel Fuse

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 3.16 times more return on investment than Bel Fuse. However, Bank Mandiri is 3.16 times more volatile than Bel Fuse B. It trades about 0.0 of its potential returns per unit of risk. Bel Fuse B is currently generating about -0.04 per unit of risk. If you would invest  35.00  in Bank Mandiri Persero on December 28, 2024 and sell it today you would lose (4.00) from holding Bank Mandiri Persero or give up 11.43% of portfolio value over 90 days.

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

Bank Mandiri Persero  vs.  Bel Fuse B

Bank Mandiri Persero

Risk-Adjusted Performance

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.

Bel Fuse B

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bel Fuse B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Bel Fuse is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Mandiri and Bel Fuse

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

The idea behind Bank Mandiri Persero and Bel Fuse B 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.