Correlation Between BANK MANDIRI and Fortive

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

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

Diversification Opportunities for BANK MANDIRI and Fortive

-0.53

Correlation Coefficient

BANK MANDIRI  Fortive

Excellent diversification

The 3 months correlation between BANK and Fortive is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Fortive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortive 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 Fortive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortive has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Fortive go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Fortive

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Fortive. In addition to that, BANK MANDIRI is 1.87 times more volatile than Fortive. It trades about -0.06 of its total potential returns per unit of risk. Fortive is currently generating about 0.15 per unit of volatility. If you would invest  6,583  in Fortive on September 13, 2024 and sell it today you would earn a total of  825.00  from holding Fortive or generate 12.53% return on investment over 90 days.

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

BANK MANDIRI  vs.  Fortive

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Fortive

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fortive are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Fortive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BANK MANDIRI and Fortive

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

The idea behind BANK MANDIRI and Fortive 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.