Correlation Between Bank Mandiri and Ebara Corp

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

Diversification Opportunities for Bank Mandiri and Ebara Corp

0.35

Correlation Coefficient

Bank Mandiri  Ebara Corp

Weak diversification

The 3 months correlation between Bank and Ebara is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Ebara Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ebara Corp ADR 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 Ebara Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ebara Corp ADR has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Ebara Corp go up and down completely randomly.

Pair Corralation between Bank Mandiri and Ebara Corp

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 2.54 times more return on investment than Ebara Corp. However, Bank Mandiri is 2.54 times more volatile than Ebara Corp ADR. It trades about 0.0 of its potential returns per unit of risk. Ebara Corp ADR is currently generating about -0.01 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.  Ebara Corp ADR

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.

Ebara Corp ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ebara Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ebara Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Mandiri and Ebara Corp

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

The idea behind Bank Mandiri Persero and Ebara Corp ADR 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.