Correlation Between Bank Mandiri and Global Acquisitions

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

Diversification Opportunities for Bank Mandiri and Global Acquisitions

-0.58

Correlation Coefficient

Bank Mandiri  Global Acquisitions

Excellent diversification

The 3 months correlation between Bank and Global is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Global Acquisitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Acquisitions 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 Global Acquisitions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Acquisitions has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Global Acquisitions go up and down completely randomly.

Pair Corralation between Bank Mandiri and Global Acquisitions

Assuming the 90 days horizon Bank Mandiri is expected to generate 67.44 times less return on investment than Global Acquisitions. But when comparing it to its historical volatility, Bank Mandiri Persero is 13.26 times less risky than Global Acquisitions. It trades about 0.02 of its potential returns per unit of risk. Global Acquisitions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Global Acquisitions on September 12, 2024 and sell it today you would earn a total of  140.00  from holding Global Acquisitions or generate 666.67% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Global Acquisitions

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. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Global Acquisitions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Acquisitions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Global Acquisitions reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Global Acquisitions

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

The idea behind Bank Mandiri Persero and Global Acquisitions 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.