Correlation Between Bank Mandiri and Edgio
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Edgio 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 Edgio 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 Edgio Inc, you can compare the effects of market volatilities on Bank Mandiri and Edgio 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 Edgio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Edgio.
Diversification Opportunities for Bank Mandiri and Edgio
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Edgio is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc 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 Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Edgio go up and down completely randomly.
Pair Corralation between Bank Mandiri and Edgio
Assuming the 90 days horizon Bank Mandiri is expected to generate 246.4 times less return on investment than Edgio. But when comparing it to its historical volatility, Bank Mandiri Persero is 30.9 times less risky than Edgio. It trades about 0.02 of its potential returns per unit of risk. Edgio Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,040 in Edgio Inc on October 27, 2024 and sell it today you would lose (1,038) from holding Edgio Inc or give up 99.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 85.42% |
Values | Daily Returns |
Bank Mandiri Persero vs. Edgio Inc
Performance |
Timeline |
Bank Mandiri Persero |
Edgio Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Bank Mandiri and Edgio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Mandiri and Edgio
The main advantage of trading using opposite Bank Mandiri and Edgio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Edgio 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 Edgio will offset losses from the drop in Edgio's long position.Bank Mandiri vs. PT Bank Rakyat | ||
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Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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