Correlation Between Bank Mandiri and Allied Properties

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

Diversification Opportunities for Bank Mandiri and Allied Properties

0.51

Correlation Coefficient

Bank Mandiri  Allied Properties

Very weak diversification

The 3 months correlation between Bank and Allied is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Allied Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Properties Real 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 Allied Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Properties Real has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Allied Properties go up and down completely randomly.

Pair Corralation between Bank Mandiri and Allied Properties

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Allied Properties. In addition to that, Bank Mandiri is 1.53 times more volatile than Allied Properties Real. It trades about -0.14 of its total potential returns per unit of risk. Allied Properties Real is currently generating about -0.04 per unit of volatility. If you would invest  1,221  in Allied Properties Real on December 20, 2024 and sell it today you would lose (50.00) from holding Allied Properties Real or give up 4.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

Bank Mandiri Persero  vs.  Allied Properties Real

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

Allied Properties Real

Risk-Adjusted Performance

Very Weak

Over the last 90 days Allied Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Allied Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Mandiri and Allied Properties

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

The idea behind Bank Mandiri Persero and Allied Properties Real 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..