Correlation Between Bank Mandiri and Katahdin Bankshares

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

Diversification Opportunities for Bank Mandiri and Katahdin Bankshares

-0.89

Correlation Coefficient

Bank Mandiri  Katahdin Bankshares

Pay attention - limited upside

The 3 months correlation between Bank and Katahdin is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Katahdin Bankshares Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Katahdin Bankshares Corp 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 Katahdin Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Katahdin Bankshares Corp has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Katahdin Bankshares go up and down completely randomly.

Pair Corralation between Bank Mandiri and Katahdin Bankshares

Assuming the 90 days horizon Bank Mandiri is expected to generate 1.59 times less return on investment than Katahdin Bankshares. But when comparing it to its historical volatility, Bank Mandiri Persero is 1.29 times less risky than Katahdin Bankshares. It trades about 0.03 of its potential returns per unit of risk. Katahdin Bankshares Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,054  in Katahdin Bankshares Corp on September 30, 2024 and sell it today you would earn a total of  446.00  from holding Katahdin Bankshares Corp or generate 21.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	77.46%
Values	Daily Returns

Bank Mandiri Persero  vs.  Katahdin Bankshares 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 unsteady 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.

Katahdin Bankshares Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Katahdin Bankshares Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical indicators, Katahdin Bankshares displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Katahdin Bankshares

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

The idea behind Bank Mandiri Persero and Katahdin Bankshares Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.