Correlation Between Bank Mandiri and Melcor Developments

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

Diversification Opportunities for Bank Mandiri and Melcor Developments

0.32

Correlation Coefficient

Bank Mandiri  Melcor Developments

Weak diversification

The 3 months correlation between Bank and Melcor is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Melcor Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melcor Developments 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 Melcor Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melcor Developments has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Melcor Developments go up and down completely randomly.

Pair Corralation between Bank Mandiri and Melcor Developments

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Melcor Developments. In addition to that, Bank Mandiri is 1.98 times more volatile than Melcor Developments. It trades about -0.14 of its total potential returns per unit of risk. Melcor Developments is currently generating about 0.01 per unit of volatility. If you would invest  855.00  in Melcor Developments on December 20, 2024 and sell it today you would lose (1.00) from holding Melcor Developments or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Bank Mandiri Persero  vs.  Melcor Developments

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.

Melcor Developments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Melcor Developments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Melcor Developments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Mandiri and Melcor Developments

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

The idea behind Bank Mandiri Persero and Melcor Developments 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 Global Correlations module to find global opportunities by holding instruments from different markets.