Correlation Between BANK MANDIRI and Ally Financial

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

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

Diversification Opportunities for BANK MANDIRI and Ally Financial

-0.73

Correlation Coefficient

BANK MANDIRI  Ally Financial

Pay attention - limited upside

The 3 months correlation between BANK and Ally is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Ally Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ally Financial 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 Ally Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ally Financial has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Ally Financial go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Ally Financial

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 2.89 times less return on investment than Ally Financial. But when comparing it to its historical volatility, BANK MANDIRI is 1.24 times less risky than Ally Financial. It trades about 0.02 of its potential returns per unit of risk. Ally Financial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,074  in Ally Financial on September 22, 2024 and sell it today you would earn a total of  1,245  from holding Ally Financial or generate 60.03% return on investment over 90 days.

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

BANK MANDIRI  vs.  Ally Financial

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

Ally Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ally Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ally Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BANK MANDIRI and Ally Financial

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

The idea behind BANK MANDIRI and Ally Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.