Correlation Between Bank Mandiri and GIB Capital

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

Diversification Opportunities for Bank Mandiri and GIB Capital

-0.41

Correlation Coefficient

Bank Mandiri  GIB Capital

Very good diversification

The 3 months correlation between Bank and GIB is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and GIB Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GIB Capital Group 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 GIB Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GIB Capital Group has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and GIB Capital go up and down completely randomly.

Pair Corralation between Bank Mandiri and GIB Capital

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the GIB Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 2.71 times less risky than GIB Capital. The pink sheet trades about -0.08 of its potential returns per unit of risk. The GIB Capital Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.11  in GIB Capital Group on October 8, 2024 and sell it today you would earn a total of  0.09  from holding GIB Capital Group or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Bank Mandiri Persero  vs.  GIB Capital Group

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.

GIB Capital Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GIB Capital Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental drivers, GIB Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and GIB Capital

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

The idea behind Bank Mandiri Persero and GIB Capital Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.