Correlation Between BANK MANDIRI and Synovus Financial

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Synovus 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 Synovus 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 Synovus Financial Corp, you can compare the effects of market volatilities on BANK MANDIRI and Synovus 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 Synovus Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Synovus Financial.

Diversification Opportunities for BANK MANDIRI and Synovus Financial

-0.64

Correlation Coefficient

BANK MANDIRI  Synovus Financial

Excellent diversification

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

Pair Corralation between BANK MANDIRI and Synovus Financial

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Synovus Financial. In addition to that, BANK MANDIRI is 1.06 times more volatile than Synovus Financial Corp. It trades about -0.16 of its total potential returns per unit of risk. Synovus Financial Corp is currently generating about 0.13 per unit of volatility. If you would invest  4,466  in Synovus Financial Corp on October 6, 2024 and sell it today you would earn a total of  514.00  from holding Synovus Financial Corp or generate 11.51% 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.  Synovus Financial Corp

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.

Synovus Financial Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Synovus Financial Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Synovus Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Synovus Financial

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

The idea behind BANK MANDIRI and Synovus Financial Corp 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.