Correlation Between Bank Mandiri and Crew Energy

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

Diversification Opportunities for Bank Mandiri and Crew Energy

-0.71

Correlation Coefficient

Bank Mandiri  Crew Energy

Pay attention - limited upside

The 3 months correlation between Bank and Crew is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Crew Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crew Energy 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 Crew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crew Energy has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Crew Energy go up and down completely randomly.

Pair Corralation between Bank Mandiri and Crew Energy

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Crew Energy. In addition to that, Bank Mandiri is 1.32 times more volatile than Crew Energy. It trades about -0.08 of its total potential returns per unit of risk. Crew Energy is currently generating about 0.32 per unit of volatility. If you would invest  496.00  in Crew Energy on August 31, 2024 and sell it today you would earn a total of  55.00  from holding Crew Energy or generate 11.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	38.1%
Values	Daily Returns

Bank Mandiri Persero  vs.  Crew Energy

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 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.

Crew Energy

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Crew Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical and fundamental indicators, Crew Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Crew Energy

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

The idea behind Bank Mandiri Persero and Crew Energy 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.