Correlation Between Bank Mandiri and Franklin Credit

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

Diversification Opportunities for Bank Mandiri and Franklin Credit

0.54

Correlation Coefficient

Bank Mandiri  Franklin Credit

Very weak diversification

The 3 months correlation between Bank and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Franklin Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Credit Mana 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 Franklin Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Credit Mana has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Franklin Credit go up and down completely randomly.

Pair Corralation between Bank Mandiri and Franklin Credit

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Franklin Credit. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 2.0 times less risky than Franklin Credit. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Franklin Credit Management is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Franklin Credit Management on December 29, 2024 and sell it today you would lose (1.00) from holding Franklin Credit Management or give up 9.09% of portfolio value over 90 days.

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

Bank Mandiri Persero  vs.  Franklin Credit Management

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.

Franklin Credit Mana

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Credit Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Franklin Credit displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Franklin Credit

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

The idea behind Bank Mandiri Persero and Franklin Credit Management 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 CEOs Directory module to screen CEOs from public companies around the world.