Correlation Between Bank Mandiri and DHAC Old

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

Diversification Opportunities for Bank Mandiri and DHAC Old

-0.44

Correlation Coefficient

Bank Mandiri  DHAC Old

Very good diversification

The 3 months correlation between Bank and DHAC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and DHAC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHAC Old 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 DHAC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHAC Old has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and DHAC Old go up and down completely randomly.

Pair Corralation between Bank Mandiri and DHAC Old

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 5.24 times more return on investment than DHAC Old. However, Bank Mandiri is 5.24 times more volatile than DHAC Old. It trades about 0.06 of its potential returns per unit of risk. DHAC Old is currently generating about 0.03 per unit of risk. If you would invest  29.00  in Bank Mandiri Persero on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Bank Mandiri Persero or generate 24.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.44%
Values	Daily Returns

Bank Mandiri Persero  vs.  DHAC Old

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.

DHAC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHAC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, DHAC Old is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bank Mandiri and DHAC Old

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

The idea behind Bank Mandiri Persero and DHAC Old 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .