Correlation Between Bank Mandiri and First National

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

Diversification Opportunities for Bank Mandiri and First National

-0.75

Correlation Coefficient

Bank Mandiri  First National

Pay attention - limited upside

The 3 months correlation between Bank and First is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and First National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Bank 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Bank has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and First National go up and down completely randomly.

Pair Corralation between Bank Mandiri and First National

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the First National. In addition to that, Bank Mandiri is 2.02 times more volatile than First National Bank. It trades about -0.23 of its total potential returns per unit of risk. First National Bank is currently generating about -0.11 per unit of volatility. If you would invest  23,000  in First National Bank on October 11, 2024 and sell it today you would lose (685.00) from holding First National Bank or give up 2.98% of portfolio value over 90 days.

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

Bank Mandiri Persero  vs.  First National Bank

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.

First National Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First National Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, First National may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bank Mandiri and First National

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

The idea behind Bank Mandiri Persero and First National Bank 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.