Correlation Between Bank Mandiri and GBank Financial

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

Diversification Opportunities for Bank Mandiri and GBank Financial

-0.81

Correlation Coefficient

Bank Mandiri  GBank Financial

Pay attention - limited upside

The 3 months correlation between Bank and GBank is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and GBank Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBank Financial Holdings 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 GBank Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBank Financial Holdings has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and GBank Financial go up and down completely randomly.

Pair Corralation between Bank Mandiri and GBank Financial

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the GBank Financial. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.09 times less risky than GBank Financial. The pink sheet trades about -0.06 of its potential returns per unit of risk. The GBank Financial Holdings is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,500  in GBank Financial Holdings on October 15, 2024 and sell it today you would earn a total of  1,170  from holding GBank Financial Holdings or generate 46.8% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  GBank Financial Holdings

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.

GBank Financial Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GBank Financial Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, GBank Financial demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and GBank Financial

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

The idea behind Bank Mandiri Persero and GBank Financial Holdings 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.