Correlation Between BANK MANDIRI and PNC FINL

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

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

Diversification Opportunities for BANK MANDIRI and PNC FINL

0.87

Correlation Coefficient

BANK MANDIRI  PNC FINL

Very poor diversification

The 3 months correlation between BANK and PNC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and PNC FINL SER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PNC FINL SER 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 PNC FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PNC FINL SER has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and PNC FINL go up and down completely randomly.

Pair Corralation between BANK MANDIRI and PNC FINL

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the PNC FINL. In addition to that, BANK MANDIRI is 1.73 times more volatile than PNC FINL SER. It trades about -0.18 of its total potential returns per unit of risk. PNC FINL SER is currently generating about -0.14 per unit of volatility. If you would invest  18,143  in PNC FINL SER on December 19, 2024 and sell it today you would lose (2,443) from holding PNC FINL SER or give up 13.47% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  PNC FINL SER

BANK MANDIRI

Risk-Adjusted Performance

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

PNC FINL SER

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNC FINL SER 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 comparatively stable which may send shares a bit higher in April 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 PNC FINL

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

The idea behind BANK MANDIRI and PNC FINL SER 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.