Correlation Between Bank Mandiri and FFW

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

Diversification Opportunities for Bank Mandiri and FFW

-0.79

Correlation Coefficient

Bank Mandiri  FFW

Pay attention - limited upside

The 3 months correlation between Bank and FFW is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and FFW Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FFW Corporation 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 FFW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FFW Corporation has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and FFW go up and down completely randomly.

Pair Corralation between Bank Mandiri and FFW

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the FFW. In addition to that, Bank Mandiri is 2.43 times more volatile than FFW Corporation. It trades about -0.14 of its total potential returns per unit of risk. FFW Corporation is currently generating about 0.18 per unit of volatility. If you would invest  3,620  in FFW Corporation on September 14, 2024 and sell it today you would earn a total of  330.00  from holding FFW Corporation or generate 9.12% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  FFW Corp.

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 fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FFW Corporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FFW Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, FFW may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank Mandiri and FFW

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

The idea behind Bank Mandiri Persero and FFW Corporation 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.