Correlation Between BANK MANDIRI and Sun Hung

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

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

Diversification Opportunities for BANK MANDIRI and Sun Hung

-0.6

Correlation Coefficient

BANK MANDIRI  Sun Hung

Excellent diversification

The 3 months correlation between BANK and Sun is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai 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 Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Sun Hung go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Sun Hung

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Sun Hung. In addition to that, BANK MANDIRI is 2.37 times more volatile than Sun Hung Kai. It trades about -0.07 of its total potential returns per unit of risk. Sun Hung Kai is currently generating about -0.02 per unit of volatility. If you would invest  909.00  in Sun Hung Kai on December 28, 2024 and sell it today you would lose (19.00) from holding Sun Hung Kai or give up 2.09% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Sun Hung Kai

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.

Sun Hung Kai

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Hung Kai has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sun Hung 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 Sun Hung

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

The idea behind BANK MANDIRI and Sun Hung Kai 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.