Correlation Between Bank Mandiri and Mentor Capital

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

Diversification Opportunities for Bank Mandiri and Mentor Capital

0.41

Correlation Coefficient

Bank Mandiri  Mentor Capital

Very weak diversification

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

Pair Corralation between Bank Mandiri and Mentor Capital

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Mentor Capital. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.39 times less risky than Mentor Capital. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Mentor Capital is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Mentor Capital on December 19, 2024 and sell it today you would lose (1.00) from holding Mentor Capital or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Bank Mandiri Persero  vs.  Mentor Capital

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 weak 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.

Mentor Capital

Risk-Adjusted Performance

Weak

Over the last 90 days Mentor Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Mentor Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Mandiri and Mentor Capital

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

The idea behind Bank Mandiri Persero and Mentor Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.