Correlation Between Bank Mandiri and Fuyao Glass

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

Diversification Opportunities for Bank Mandiri and Fuyao Glass

-0.72

Correlation Coefficient

Bank Mandiri  Fuyao Glass

Pay attention - limited upside

The 3 months correlation between Bank and Fuyao is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Fuyao Glass Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuyao Glass Industry 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 Fuyao Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuyao Glass Industry has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Fuyao Glass go up and down completely randomly.

Pair Corralation between Bank Mandiri and Fuyao Glass

Assuming the 90 days horizon Bank Mandiri is expected to generate 15.52 times less return on investment than Fuyao Glass. In addition to that, Bank Mandiri is 1.05 times more volatile than Fuyao Glass Industry. It trades about 0.0 of its total potential returns per unit of risk. Fuyao Glass Industry is currently generating about 0.06 per unit of volatility. If you would invest  137.00  in Fuyao Glass Industry on October 8, 2024 and sell it today you would earn a total of  30.00  from holding Fuyao Glass Industry or generate 21.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.43%
Values	Daily Returns

Bank Mandiri Persero  vs.  Fuyao Glass Industry

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.

Fuyao Glass Industry

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fuyao Glass Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Fuyao Glass showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Fuyao Glass

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

The idea behind Bank Mandiri Persero and Fuyao Glass Industry 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.