Correlation Between BANK MANDIRI and Deutsche Bank

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

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

Diversification Opportunities for BANK MANDIRI and Deutsche Bank

-0.58

Correlation Coefficient

BANK MANDIRI  Deutsche Bank

Excellent diversification

The 3 months correlation between BANK and Deutsche is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Deutsche Bank Aktiengesellscha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Bank Aktien 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 Deutsche Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Bank Aktien has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Deutsche Bank go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Deutsche Bank

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 4.08 times less return on investment than Deutsche Bank. But when comparing it to its historical volatility, BANK MANDIRI is 1.38 times less risky than Deutsche Bank. It trades about 0.15 of its potential returns per unit of risk. Deutsche Bank Aktiengesellschaft is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  1,632  in Deutsche Bank Aktiengesellschaft on October 24, 2024 and sell it today you would earn a total of  237.00  from holding Deutsche Bank Aktiengesellschaft or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

BANK MANDIRI  vs.  Deutsche Bank Aktiengesellscha

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 uncertain 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.

Deutsche Bank Aktien

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Bank Aktiengesellschaft are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile forward-looking signals, Deutsche Bank sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Deutsche Bank

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

The idea behind BANK MANDIRI and Deutsche Bank Aktiengesellschaft 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.