Correlation Between Bank Mandiri and Equitable

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

Diversification Opportunities for Bank Mandiri and Equitable

0.76

Correlation Coefficient

Bank Mandiri  Equitable

Poor diversification

The 3 months correlation between Bank and Equitable is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Equitable Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equitable Group 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 Equitable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equitable Group has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Equitable go up and down completely randomly.

Pair Corralation between Bank Mandiri and Equitable

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Equitable. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.43 times less risky than Equitable. The pink sheet trades about -0.3 of its potential returns per unit of risk. The Equitable Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7,202  in Equitable Group on October 11, 2024 and sell it today you would earn a total of  23.00  from holding Equitable Group or generate 0.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Bank Mandiri Persero  vs.  Equitable Group

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.

Equitable Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equitable Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Equitable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Mandiri and Equitable

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

The idea behind Bank Mandiri Persero and Equitable Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.