Correlation Between Bank Mandiri and Burnham Holdings

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

Diversification Opportunities for Bank Mandiri and Burnham Holdings

-0.4

Correlation Coefficient

Bank Mandiri  Burnham Holdings

Very good diversification

The 3 months correlation between Bank and Burnham is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Burnham Holdings PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings PFD 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 Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings PFD has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Burnham Holdings go up and down completely randomly.

Pair Corralation between Bank Mandiri and Burnham Holdings

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Burnham Holdings. In addition to that, Bank Mandiri is 4.08 times more volatile than Burnham Holdings PFD. It trades about -0.19 of its total potential returns per unit of risk. Burnham Holdings PFD is currently generating about 0.23 per unit of volatility. If you would invest  5,175  in Burnham Holdings PFD on October 8, 2024 and sell it today you would earn a total of  150.00  from holding Burnham Holdings PFD or generate 2.9% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Burnham Holdings PFD

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.

Burnham Holdings PFD

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings PFD are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Burnham Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Mandiri and Burnham Holdings

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

The idea behind Bank Mandiri Persero and Burnham Holdings PFD 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.