Correlation Between Bank Mandiri and Xinjiang Goldwind

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

Diversification Opportunities for Bank Mandiri and Xinjiang Goldwind

-0.18

Correlation Coefficient

Bank Mandiri  Xinjiang Goldwind

Good diversification

The 3 months correlation between Bank and Xinjiang is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science 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 Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Xinjiang Goldwind go up and down completely randomly.

Pair Corralation between Bank Mandiri and Xinjiang Goldwind

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Xinjiang Goldwind. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 2.11 times less risky than Xinjiang Goldwind. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Xinjiang Goldwind Science is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  76.00  in Xinjiang Goldwind Science on November 20, 2024 and sell it today you would lose (6.00) from holding Xinjiang Goldwind Science or give up 7.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	64.41%
Values	Daily Returns

Bank Mandiri Persero  vs.  Xinjiang Goldwind Science

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 unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xinjiang Goldwind Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xinjiang Goldwind Science has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Xinjiang Goldwind 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 Xinjiang Goldwind

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

The idea behind Bank Mandiri Persero and Xinjiang Goldwind Science 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.