Correlation Between Bank Mandiri and Boralex

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

Diversification Opportunities for Bank Mandiri and Boralex

0.9

Correlation Coefficient

Bank Mandiri  Boralex

Almost no diversification

The 3 months correlation between Bank and Boralex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex 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 Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Boralex go up and down completely randomly.

Pair Corralation between Bank Mandiri and Boralex

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.63 times more return on investment than Boralex. However, Bank Mandiri Persero is 1.6 times less risky than Boralex. It trades about 0.03 of its potential returns per unit of risk. Boralex is currently generating about -0.02 per unit of risk. If you would invest  1,221  in Bank Mandiri Persero on October 7, 2024 and sell it today you would earn a total of  197.00  from holding Bank Mandiri Persero or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	77.82%
Values	Daily Returns

Bank Mandiri Persero  vs.  Boralex

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.

Boralex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boralex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Bank Mandiri and Boralex

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

The idea behind Bank Mandiri Persero and Boralex 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.