Correlation Between Bank Mandiri and Piraeus Bank

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

Diversification Opportunities for Bank Mandiri and Piraeus Bank

-0.63

Correlation Coefficient

Bank Mandiri  Piraeus Bank

Excellent diversification

The 3 months correlation between Bank and Piraeus is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Piraeus Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piraeus Bank SA 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 Piraeus Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piraeus Bank SA has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Piraeus Bank go up and down completely randomly.

Pair Corralation between Bank Mandiri and Piraeus Bank

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Piraeus Bank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.01 times less risky than Piraeus Bank. The pink sheet trades about -0.17 of its potential returns per unit of risk. The Piraeus Bank SA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  380.00  in Piraeus Bank SA on December 1, 2024 and sell it today you would earn a total of  80.00  from holding Piraeus Bank SA or generate 21.05% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Piraeus Bank SA

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.

Piraeus Bank SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Piraeus Bank SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Piraeus Bank showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Piraeus Bank

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

The idea behind Bank Mandiri Persero and Piraeus Bank SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.