Correlation Between BANK MANDIRI and Data Modul

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

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

Diversification Opportunities for BANK MANDIRI and Data Modul

0.44

Correlation Coefficient

BANK MANDIRI  Data Modul

Very weak diversification

The 3 months correlation between BANK and Data is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Data Modul AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Modul AG 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 Data Modul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Modul AG has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Data Modul go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Data Modul

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Data Modul. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.08 times less risky than Data Modul. The stock trades about -0.11 of its potential returns per unit of risk. The Data Modul AG is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,740  in Data Modul AG on October 22, 2024 and sell it today you would lose (200.00) from holding Data Modul AG or give up 7.3% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Data Modul AG

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Data Modul AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Modul AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Data Modul is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BANK MANDIRI and Data Modul

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

The idea behind BANK MANDIRI and Data Modul AG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.