Correlation Between BANK MANDIRI and BANDAI NAMCO

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

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

Diversification Opportunities for BANK MANDIRI and BANDAI NAMCO

-0.64

Correlation Coefficient

BANK MANDIRI  BANDAI NAMCO

Excellent diversification

The 3 months correlation between BANK and BANDAI is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and BANDAI NAMCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANDAI NAMCO Holdings 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 BANDAI NAMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANDAI NAMCO Holdings has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and BANDAI NAMCO go up and down completely randomly.

Pair Corralation between BANK MANDIRI and BANDAI NAMCO

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 16.67 times less return on investment than BANDAI NAMCO. But when comparing it to its historical volatility, BANK MANDIRI is 3.57 times less risky than BANDAI NAMCO. It trades about 0.02 of its potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  253.00  in BANDAI NAMCO Holdings on October 13, 2024 and sell it today you would earn a total of  1,896  from holding BANDAI NAMCO Holdings or generate 749.41% 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.  BANDAI NAMCO Holdings

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.

BANDAI NAMCO Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BANDAI NAMCO Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BANDAI NAMCO is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANK MANDIRI and BANDAI NAMCO

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

The idea behind BANK MANDIRI and BANDAI NAMCO Holdings 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.