Correlation Between BANK MANDIRI and TDK

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

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

Diversification Opportunities for BANK MANDIRI and TDK

-0.61

Correlation Coefficient

BANK MANDIRI  TDK

Excellent diversification

The 3 months correlation between BANK and TDK is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and TDK Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDK Corporation 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 TDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDK Corporation has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and TDK go up and down completely randomly.

Pair Corralation between BANK MANDIRI and TDK

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the TDK. In addition to that, BANK MANDIRI is 1.04 times more volatile than TDK Corporation. It trades about -0.11 of its total potential returns per unit of risk. TDK Corporation is currently generating about -0.01 per unit of volatility. If you would invest  1,221  in TDK Corporation on October 11, 2024 and sell it today you would lose (15.00) from holding TDK Corporation or give up 1.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.44%
Values	Daily Returns

BANK MANDIRI  vs.  TDK 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 fragile 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.

TDK Corporation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TDK Corporation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward-looking signals, TDK may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BANK MANDIRI and TDK

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

The idea behind BANK MANDIRI and TDK Corporation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.