Correlation Between PT Bank and FedEx Corp

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

By analyzing existing cross correlation between PT Bank Mandiri and FedEx Corp, you can compare the effects of market volatilities on PT Bank and FedEx Corp 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 PT Bank with a short position of FedEx Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and FedEx Corp.

Diversification Opportunities for PT Bank and FedEx Corp

0.82

Correlation Coefficient

PT Bank  FedEx Corp

Very poor diversification

The 3 months correlation between PQ9 and FedEx is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and FedEx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx Corp and PT Bank 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 PT Bank Mandiri are associated (or correlated) with FedEx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx Corp has no effect on the direction of PT Bank i.e., PT Bank and FedEx Corp go up and down completely randomly.

Pair Corralation between PT Bank and FedEx Corp

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the FedEx Corp. In addition to that, PT Bank is 2.37 times more volatile than FedEx Corp. It trades about -0.05 of its total potential returns per unit of risk. FedEx Corp is currently generating about -0.1 per unit of volatility. If you would invest  26,140  in FedEx Corp on December 19, 2024 and sell it today you would lose (3,665) from holding FedEx Corp or give up 14.02% of portfolio value over 90 days.

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

PT Bank Mandiri  vs.  FedEx Corp

PT Bank Mandiri

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

FedEx Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days FedEx Corp 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.

Pair Trading with PT Bank and FedEx Corp

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

The idea behind PT Bank Mandiri and FedEx 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.