Correlation Between Bank Mandiri and Wolters Kluwer

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

Diversification Opportunities for Bank Mandiri and Wolters Kluwer

0.36

Correlation Coefficient

Bank Mandiri  Wolters Kluwer

Weak diversification

The 3 months correlation between Bank and Wolters is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV 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 Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Wolters Kluwer go up and down completely randomly.

Pair Corralation between Bank Mandiri and Wolters Kluwer

Assuming the 90 days horizon Bank Mandiri is expected to generate 3.29 times less return on investment than Wolters Kluwer. In addition to that, Bank Mandiri is 1.53 times more volatile than Wolters Kluwer NV. It trades about 0.02 of its total potential returns per unit of risk. Wolters Kluwer NV is currently generating about 0.08 per unit of volatility. If you would invest  10,736  in Wolters Kluwer NV on October 5, 2024 and sell it today you would earn a total of  5,809  from holding Wolters Kluwer NV or generate 54.11% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Wolters Kluwer NV

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.

Wolters Kluwer NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Wolters Kluwer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Mandiri and Wolters Kluwer

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

The idea behind Bank Mandiri Persero and Wolters Kluwer NV 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..