Correlation Between BANK MANDIRI and ANGANG STEEL

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

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

Diversification Opportunities for BANK MANDIRI and ANGANG STEEL

-0.25

Correlation Coefficient

BANK MANDIRI  ANGANG STEEL

Very good diversification

The 3 months correlation between BANK and ANGANG is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H 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 ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and ANGANG STEEL go up and down completely randomly.

Pair Corralation between BANK MANDIRI and ANGANG STEEL

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the ANGANG STEEL. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.12 times less risky than ANGANG STEEL. The stock trades about -0.16 of its potential returns per unit of risk. The ANGANG STEEL H is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  19.00  in ANGANG STEEL H on October 6, 2024 and sell it today you would lose (2.00) from holding ANGANG STEEL H or give up 10.53% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  ANGANG STEEL H

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 unsteady 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.

ANGANG STEEL H

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANGANG STEEL H has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BANK MANDIRI and ANGANG STEEL

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

The idea behind BANK MANDIRI and ANGANG STEEL H 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.