Correlation Between Bank Mandiri and Smart Share

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

Diversification Opportunities for Bank Mandiri and Smart Share

-0.61

Correlation Coefficient

Bank Mandiri  Smart Share

Excellent diversification

The 3 months correlation between Bank and Smart is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Smart Share Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Share Global 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 Smart Share. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Share Global has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Smart Share go up and down completely randomly.

Pair Corralation between Bank Mandiri and Smart Share

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Smart Share. In addition to that, Bank Mandiri is 1.16 times more volatile than Smart Share Global. It trades about -0.11 of its total potential returns per unit of risk. Smart Share Global is currently generating about 0.16 per unit of volatility. If you would invest  73.00  in Smart Share Global on November 28, 2024 and sell it today you would earn a total of  40.00  from holding Smart Share Global or generate 54.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.55%
Values	Daily Returns

Bank Mandiri Persero  vs.  Smart Share Global

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Smart Share Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Share Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Smart Share displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Smart Share

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

The idea behind Bank Mandiri Persero and Smart Share Global 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.