Correlation Between Bank Mandiri and XCPCNL Business

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

Diversification Opportunities for Bank Mandiri and XCPCNL Business

0.0

Correlation Coefficient

Bank Mandiri  XCPCNL Business

Pay attention - limited upside

The 3 months correlation between Bank and XCPCNL is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and XCPCNL Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCPCNL Business Services 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 XCPCNL Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCPCNL Business Services has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and XCPCNL Business go up and down completely randomly.

Pair Corralation between Bank Mandiri and XCPCNL Business

Assuming the 90 days horizon Bank Mandiri is expected to generate 15.49 times less return on investment than XCPCNL Business. But when comparing it to its historical volatility, Bank Mandiri Persero is 8.1 times less risky than XCPCNL Business. It trades about 0.05 of its potential returns per unit of risk. XCPCNL Business Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.08  in XCPCNL Business Services on October 20, 2024 and sell it today you would lose (0.07) from holding XCPCNL Business Services or give up 87.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.71%
Values	Daily Returns

Bank Mandiri Persero  vs.  XCPCNL Business Services

Bank Mandiri Persero

Risk-Adjusted Performance

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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.

XCPCNL Business Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XCPCNL Business Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, XCPCNL Business is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank Mandiri and XCPCNL Business

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

The idea behind Bank Mandiri Persero and XCPCNL Business Services 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.