Correlation Between Bank Mandiri and Community Bank
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Community 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 Community 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 Community Bank, you can compare the effects of market volatilities on Bank Mandiri and Community 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 Community Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Community Bank.
Diversification Opportunities for Bank Mandiri and Community Bank
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Community is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Community Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Bank 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 Community Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Bank has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Community Bank go up and down completely randomly.
Pair Corralation between Bank Mandiri and Community Bank
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Community Bank. In addition to that, Bank Mandiri is 4.02 times more volatile than Community Bank. It trades about -0.22 of its total potential returns per unit of risk. Community Bank is currently generating about 0.28 per unit of volatility. If you would invest 1,340 in Community Bank on September 26, 2024 and sell it today you would earn a total of 55.00 from holding Community Bank or generate 4.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 44.44% |
Values | Daily Returns |
Bank Mandiri Persero vs. Community Bank
Performance |
Timeline |
Bank Mandiri Persero |
Community Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Bank Mandiri and Community Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Mandiri and Community Bank
The main advantage of trading using opposite Bank Mandiri and Community Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Community 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 Community Bank will offset losses from the drop in Community Bank's long position.Bank Mandiri vs. Banco Bradesco SA | Bank Mandiri vs. Itau Unibanco Banco | Bank Mandiri vs. Deutsche Bank AG | Bank Mandiri vs. Banco Santander Brasil |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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