Correlation Between Bank Mandiri and Yokogawa Electric

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

Diversification Opportunities for Bank Mandiri and Yokogawa Electric

0.56

Correlation Coefficient

Bank Mandiri  Yokogawa Electric

Very weak diversification

The 3 months correlation between Bank and Yokogawa is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Yokogawa Electric Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokogawa Electric Corp 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 Yokogawa Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokogawa Electric Corp has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Yokogawa Electric go up and down completely randomly.

Pair Corralation between Bank Mandiri and Yokogawa Electric

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 2.17 times more return on investment than Yokogawa Electric. However, Bank Mandiri is 2.17 times more volatile than Yokogawa Electric Corp. It trades about 0.0 of its potential returns per unit of risk. Yokogawa Electric Corp is currently generating about -0.04 per unit of risk. If you would invest  35.00  in Bank Mandiri Persero on December 30, 2024 and sell it today you would lose (4.00) from holding Bank Mandiri Persero or give up 11.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Bank Mandiri Persero  vs.  Yokogawa Electric Corp

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.

Yokogawa Electric Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yokogawa Electric Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bank Mandiri and Yokogawa Electric

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

The idea behind Bank Mandiri Persero and Yokogawa Electric Corp 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.