Correlation Between Bank Mandiri and Commercial International

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

Diversification Opportunities for Bank Mandiri and Commercial International

-0.34

Correlation Coefficient

Bank Mandiri  Commercial International

Very good diversification

The 3 months correlation between Bank and Commercial is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International 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 Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Commercial International go up and down completely randomly.

Pair Corralation between Bank Mandiri and Commercial International

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Commercial International. In addition to that, Bank Mandiri is 1.97 times more volatile than Commercial International Bank. It trades about -0.05 of its total potential returns per unit of risk. Commercial International Bank is currently generating about 0.07 per unit of volatility. If you would invest  142.00  in Commercial International Bank on December 30, 2024 and sell it today you would earn a total of  9.00  from holding Commercial International Bank or generate 6.34% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Commercial International Bank

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Commercial International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial International Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Commercial International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bank Mandiri and Commercial International

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

The idea behind Bank Mandiri Persero and Commercial International Bank 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.