Correlation Between BANK MANDIRI and HYDROFARM HLD

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and HYDROFARM HLD 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 HYDROFARM HLD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK MANDIRI and HYDROFARM HLD GRP, you can compare the effects of market volatilities on BANK MANDIRI and HYDROFARM HLD 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 HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and HYDROFARM HLD.

Diversification Opportunities for BANK MANDIRI and HYDROFARM HLD

-0.1

Correlation Coefficient

BANK MANDIRI  HYDROFARM HLD

Good diversification

The 3 months correlation between BANK and HYDROFARM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP 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 are associated (or correlated) with HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and HYDROFARM HLD go up and down completely randomly.

Pair Corralation between BANK MANDIRI and HYDROFARM HLD

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the HYDROFARM HLD. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.68 times less risky than HYDROFARM HLD. The stock trades about -0.11 of its potential returns per unit of risk. The HYDROFARM HLD GRP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  61.00  in HYDROFARM HLD GRP on September 15, 2024 and sell it today you would earn a total of  4.00  from holding HYDROFARM HLD GRP or generate 6.56% return on investment over 90 days.

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

BANK MANDIRI  vs.  HYDROFARM HLD GRP

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

HYDROFARM HLD GRP

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HYDROFARM HLD GRP are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HYDROFARM HLD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BANK MANDIRI and HYDROFARM HLD

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

The idea behind BANK MANDIRI and HYDROFARM HLD GRP 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.