Correlation Between Bank Mandiri and InterRent Real

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

Diversification Opportunities for Bank Mandiri and InterRent Real

0.54

Correlation Coefficient

Bank Mandiri  InterRent Real

Very weak diversification

The 3 months correlation between Bank and InterRent is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and InterRent Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterRent Real Estate 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 InterRent Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterRent Real Estate has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and InterRent Real go up and down completely randomly.

Pair Corralation between Bank Mandiri and InterRent Real

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the InterRent Real. In addition to that, Bank Mandiri is 1.34 times more volatile than InterRent Real Estate. It trades about -0.13 of its total potential returns per unit of risk. InterRent Real Estate is currently generating about 0.12 per unit of volatility. If you would invest  711.00  in InterRent Real Estate on December 21, 2024 and sell it today you would earn a total of  61.00  from holding InterRent Real Estate or generate 8.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	66.1%
Values	Daily Returns

Bank Mandiri Persero  vs.  InterRent Real Estate

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

InterRent Real Estate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InterRent Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, InterRent Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and InterRent Real

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

The idea behind Bank Mandiri Persero and InterRent Real Estate 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.