Correlation Between Bank Mandiri and BlackRock Investment

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

Diversification Opportunities for Bank Mandiri and BlackRock Investment

0.92

Correlation Coefficient

Bank Mandiri  BlackRock Investment

Almost no diversification

The 3 months correlation between Bank and BlackRock is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and BlackRock Investment Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Investment 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 BlackRock Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Investment has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and BlackRock Investment go up and down completely randomly.

Pair Corralation between Bank Mandiri and BlackRock Investment

Assuming the 90 days horizon Bank Mandiri is expected to generate 1.11 times less return on investment than BlackRock Investment. In addition to that, Bank Mandiri is 2.35 times more volatile than BlackRock Investment Quality. It trades about 0.01 of its total potential returns per unit of risk. BlackRock Investment Quality is currently generating about 0.02 per unit of volatility. If you would invest  1,087  in BlackRock Investment Quality on October 4, 2024 and sell it today you would earn a total of  39.00  from holding BlackRock Investment Quality or generate 3.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.73%
Values	Daily Returns

Bank Mandiri Persero  vs.  BlackRock Investment Quality

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

BlackRock Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Investment Quality has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bank Mandiri and BlackRock Investment

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

The idea behind Bank Mandiri Persero and BlackRock Investment Quality 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.