Correlation Between Bank Mandiri and SANUWAVE Health

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

Diversification Opportunities for Bank Mandiri and SANUWAVE Health

-0.92

Correlation Coefficient

Bank Mandiri  SANUWAVE Health

Pay attention - limited upside

The 3 months correlation between Bank and SANUWAVE is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and SANUWAVE Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANUWAVE Health 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 SANUWAVE Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANUWAVE Health has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and SANUWAVE Health go up and down completely randomly.

Pair Corralation between Bank Mandiri and SANUWAVE Health

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the SANUWAVE Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 2.3 times less risky than SANUWAVE Health. The pink sheet trades about -0.13 of its potential returns per unit of risk. The SANUWAVE Health is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  2,200  in SANUWAVE Health on September 17, 2024 and sell it today you would lose (176.00) from holding SANUWAVE Health or give up 8.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank Mandiri Persero  vs.  SANUWAVE Health

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 weak 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.

SANUWAVE Health

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SANUWAVE Health are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SANUWAVE Health showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and SANUWAVE Health

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

The idea behind Bank Mandiri Persero and SANUWAVE Health 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.