Correlation Between Bank Mandiri and Volkswagen

Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Volkswagen 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 Volkswagen 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 Volkswagen AG 110, you can compare the effects of market volatilities on Bank Mandiri and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Volkswagen.

Diversification Opportunities for Bank Mandiri and Volkswagen

-0.63

Correlation Coefficient

Bank Mandiri  Volkswagen

Excellent diversification

The 3 months correlation between Bank and Volkswagen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Volkswagen AG 110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 110 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG 110 has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Volkswagen go up and down completely randomly.

Pair Corralation between Bank Mandiri and Volkswagen

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Volkswagen. In addition to that, Bank Mandiri is 3.87 times more volatile than Volkswagen AG 110. It trades about -0.11 of its total potential returns per unit of risk. Volkswagen AG 110 is currently generating about 0.25 per unit of volatility. If you would invest  867.00  in Volkswagen AG 110 on November 27, 2024 and sell it today you would earn a total of  218.00  from holding Volkswagen AG 110 or generate 25.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Bank Mandiri Persero  vs.  Volkswagen AG 110

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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Volkswagen AG 110

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volkswagen AG 110 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Volkswagen showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Volkswagen

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

The idea behind Bank Mandiri Persero and Volkswagen AG 110 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.