Correlation Between Bank Mandiri and Heartland Banccorp

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

Diversification Opportunities for Bank Mandiri and Heartland Banccorp

0.29

Correlation Coefficient

Bank Mandiri  Heartland Banccorp

Modest diversification

The 3 months correlation between Bank and Heartland is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Heartland Banccorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Banccorp 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 Heartland Banccorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Banccorp has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Heartland Banccorp go up and down completely randomly.

Pair Corralation between Bank Mandiri and Heartland Banccorp

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Heartland Banccorp. In addition to that, Bank Mandiri is 1.84 times more volatile than Heartland Banccorp. It trades about -0.05 of its total potential returns per unit of risk. Heartland Banccorp is currently generating about 0.12 per unit of volatility. If you would invest  15,327  in Heartland Banccorp on December 29, 2024 and sell it today you would earn a total of  673.00  from holding Heartland Banccorp or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.34%
Values	Daily Returns

Bank Mandiri Persero  vs.  Heartland Banccorp

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 fragile 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.

Heartland Banccorp

Risk-Adjusted Performance

OK

Over the last 90 days Heartland Banccorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very fragile basic indicators, Heartland Banccorp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bank Mandiri and Heartland Banccorp

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

The idea behind Bank Mandiri Persero and Heartland Banccorp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.