Correlation Between BANK MANDIRI and Talanx AG

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

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

Diversification Opportunities for BANK MANDIRI and Talanx AG

-0.68

Correlation Coefficient

BANK MANDIRI  Talanx AG

Excellent diversification

The 3 months correlation between BANK and Talanx is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Talanx AG go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Talanx AG

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Talanx AG. In addition to that, BANK MANDIRI is 1.4 times more volatile than Talanx AG. It trades about -0.33 of its total potential returns per unit of risk. Talanx AG is currently generating about -0.07 per unit of volatility. If you would invest  8,415  in Talanx AG on October 9, 2024 and sell it today you would lose (120.00) from holding Talanx AG or give up 1.43% 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.  Talanx AG

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.

Talanx AG

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Talanx AG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Talanx AG

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

The idea behind BANK MANDIRI and Talanx AG 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.