Correlation Between Bank Mandiri and Evertz Technologies

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

Diversification Opportunities for Bank Mandiri and Evertz Technologies

0.7

Correlation Coefficient

Bank Mandiri  Evertz Technologies

Poor diversification

The 3 months correlation between Bank and Evertz is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Evertz Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertz Technologies 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 Evertz Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertz Technologies has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Evertz Technologies go up and down completely randomly.

Pair Corralation between Bank Mandiri and Evertz Technologies

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Evertz Technologies. In addition to that, Bank Mandiri is 1.93 times more volatile than Evertz Technologies Limited. It trades about -0.17 of its total potential returns per unit of risk. Evertz Technologies Limited is currently generating about -0.06 per unit of volatility. If you would invest  868.00  in Evertz Technologies Limited on October 7, 2024 and sell it today you would lose (24.00) from holding Evertz Technologies Limited or give up 2.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.62%
Values	Daily Returns

Bank Mandiri Persero  vs.  Evertz Technologies Limited

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.

Evertz Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bank Mandiri and Evertz Technologies

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

The idea behind Bank Mandiri Persero and Evertz Technologies Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.