Correlation Between Bank Mandiri and Intermediate Capital

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

Diversification Opportunities for Bank Mandiri and Intermediate Capital

0.45

Correlation Coefficient

Bank Mandiri  Intermediate Capital

Very weak diversification

The 3 months correlation between Bank and Intermediate is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Intermediate Capital go up and down completely randomly.

Pair Corralation between Bank Mandiri and Intermediate Capital

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Intermediate Capital. In addition to that, Bank Mandiri is 10.82 times more volatile than Intermediate Capital Group. It trades about -0.04 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about -0.13 per unit of volatility. If you would invest  2,714  in Intermediate Capital Group on December 23, 2024 and sell it today you would lose (118.00) from holding Intermediate Capital Group or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Bank Mandiri Persero  vs.  Intermediate Capital Group

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Intermediate Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Intermediate Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Mandiri and Intermediate Capital

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

The idea behind Bank Mandiri Persero and Intermediate 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.