Correlation Between Bank Mandiri and Cartier Resources

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

Diversification Opportunities for Bank Mandiri and Cartier Resources

-0.63

Correlation Coefficient

Bank Mandiri  Cartier Resources

Excellent diversification

The 3 months correlation between Bank and Cartier is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Cartier Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Resources 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 Cartier Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Resources has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Cartier Resources go up and down completely randomly.

Pair Corralation between Bank Mandiri and Cartier Resources

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.67 times more return on investment than Cartier Resources. However, Bank Mandiri Persero is 1.49 times less risky than Cartier Resources. It trades about 0.02 of its potential returns per unit of risk. Cartier Resources is currently generating about -0.16 per unit of risk. If you would invest  43.00  in Bank Mandiri Persero on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Bank Mandiri Persero or generate 0.0% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Cartier Resources

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.

Cartier Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Cartier Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Cartier Resources

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

The idea behind Bank Mandiri Persero and Cartier Resources 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.