Correlation Between Bank Mandiri and Benchmark Bankshares

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

Diversification Opportunities for Bank Mandiri and Benchmark Bankshares

-0.94

Correlation Coefficient

Bank Mandiri  Benchmark Bankshares

Pay attention - limited upside

The 3 months correlation between Bank and Benchmark is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Benchmark Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Bankshares 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 Benchmark Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Bankshares has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Benchmark Bankshares go up and down completely randomly.

Pair Corralation between Bank Mandiri and Benchmark Bankshares

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Benchmark Bankshares. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.0 times less risky than Benchmark Bankshares. The pink sheet trades about -0.25 of its potential returns per unit of risk. The Benchmark Bankshares is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,470  in Benchmark Bankshares on October 7, 2024 and sell it today you would earn a total of  130.00  from holding Benchmark Bankshares or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Bank Mandiri Persero  vs.  Benchmark Bankshares

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Benchmark Bankshares

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Benchmark Bankshares are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental drivers, Benchmark Bankshares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Benchmark Bankshares

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

The idea behind Bank Mandiri Persero and Benchmark Bankshares 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.