Correlation Between Bank Mandiri and Kimberly-Clark

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

Diversification Opportunities for Bank Mandiri and Kimberly-Clark

-0.69

Correlation Coefficient

Bank Mandiri  Kimberly-Clark

Excellent diversification

The 3 months correlation between Bank and Kimberly-Clark is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Kimberly Clark de Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de 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 Kimberly-Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Kimberly-Clark go up and down completely randomly.

Pair Corralation between Bank Mandiri and Kimberly-Clark

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Kimberly-Clark. In addition to that, Bank Mandiri is 1.81 times more volatile than Kimberly Clark de Mexico. It trades about -0.04 of its total potential returns per unit of risk. Kimberly Clark de Mexico is currently generating about 0.18 per unit of volatility. If you would invest  706.00  in Kimberly Clark de Mexico on December 28, 2024 and sell it today you would earn a total of  131.00  from holding Kimberly Clark de Mexico or generate 18.56% 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.  Kimberly Clark de Mexico

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 weak 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.

Kimberly Clark de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark de Mexico are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, Kimberly-Clark showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Kimberly-Clark

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

The idea behind Bank Mandiri Persero and Kimberly Clark de Mexico 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.