Correlation Between Bank Mandiri and Surge Components

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

Diversification Opportunities for Bank Mandiri and Surge Components

0.65

Correlation Coefficient

Bank Mandiri  Surge Components

Poor diversification

The 3 months correlation between Bank and Surge is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Surge Components in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Components 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 Surge Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Components has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Surge Components go up and down completely randomly.

Pair Corralation between Bank Mandiri and Surge Components

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.86 times more return on investment than Surge Components. However, Bank Mandiri Persero is 1.16 times less risky than Surge Components. It trades about 0.08 of its potential returns per unit of risk. Surge Components is currently generating about 0.05 per unit of risk. If you would invest  1,402  in Bank Mandiri Persero on October 23, 2024 and sell it today you would earn a total of  37.00  from holding Bank Mandiri Persero or generate 2.64% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Surge Components

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Surge Components

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surge Components has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Surge Components is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank Mandiri and Surge Components

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

The idea behind Bank Mandiri Persero and Surge Components 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.