Correlation Between Bank Mandiri and Swedbank

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

Diversification Opportunities for Bank Mandiri and Swedbank

0.72

Correlation Coefficient

Bank Mandiri  Swedbank

Poor diversification

The 3 months correlation between Bank and Swedbank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Swedbank AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedbank AB 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 Swedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedbank AB has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Swedbank go up and down completely randomly.

Pair Corralation between Bank Mandiri and Swedbank

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Swedbank. In addition to that, Bank Mandiri is 1.21 times more volatile than Swedbank AB. It trades about -0.09 of its total potential returns per unit of risk. Swedbank AB is currently generating about -0.1 per unit of volatility. If you would invest  2,141  in Swedbank AB on August 30, 2024 and sell it today you would lose (214.00) from holding Swedbank AB or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bank Mandiri Persero  vs.  Swedbank AB

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 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.

Swedbank AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swedbank AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bank Mandiri and Swedbank

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

The idea behind Bank Mandiri Persero and Swedbank AB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.