Correlation Between Bank Mandiri and Partners Bank

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

Diversification Opportunities for Bank Mandiri and Partners Bank

0.28

Correlation Coefficient

Bank Mandiri  Partners Bank

Modest diversification

The 3 months correlation between Bank and Partners is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Partners Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Bank 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 Partners Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Bank has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Partners Bank go up and down completely randomly.

Pair Corralation between Bank Mandiri and Partners Bank

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Partners Bank. In addition to that, Bank Mandiri is 2.06 times more volatile than Partners Bank of. It trades about 0.0 of its total potential returns per unit of risk. Partners Bank of is currently generating about 0.0 per unit of volatility. If you would invest  1,000.00  in Partners Bank of on December 29, 2024 and sell it today you would lose (20.00) from holding Partners Bank of or give up 2.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bank Mandiri Persero  vs.  Partners Bank of

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 nearly stable basic indicators, Bank Mandiri is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Partners Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Partners Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, Partners Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Mandiri and Partners Bank

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

The idea behind Bank Mandiri Persero and Partners Bank of 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.