Correlation Between Bank Mandiri and Unico American

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

Diversification Opportunities for Bank Mandiri and Unico American

-0.21

Correlation Coefficient

Bank Mandiri  Unico American

Very good diversification

The 3 months correlation between Bank and Unico is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Unico American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unico American 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 Unico American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unico American has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Unico American go up and down completely randomly.

Pair Corralation between Bank Mandiri and Unico American

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Unico American. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 2.18 times less risky than Unico American. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Unico American is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  5.70  in Unico American on October 11, 2024 and sell it today you would earn a total of  2.41  from holding Unico American or generate 42.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Bank Mandiri Persero  vs.  Unico American

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.

Unico American

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unico American are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Unico American displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Unico American

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

The idea behind Bank Mandiri Persero and Unico American 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.