Correlation Between PT Bank and General Mills

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

Diversification Opportunities for PT Bank and General Mills

0.51

Correlation Coefficient

PT Bank  General Mills

Very weak diversification

The 3 months correlation between PQ9 and General is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of PT Bank i.e., PT Bank and General Mills go up and down completely randomly.

Pair Corralation between PT Bank and General Mills

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the General Mills. In addition to that, PT Bank is 3.45 times more volatile than General Mills. It trades about -0.04 of its total potential returns per unit of risk. General Mills is currently generating about -0.07 per unit of volatility. If you would invest  6,047  in General Mills on December 30, 2024 and sell it today you would lose (548.00) from holding General Mills or give up 9.06% of portfolio value over 90 days.

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

PT Bank Mandiri  vs.  General Mills

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 uncertain 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.

General Mills

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Mills has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with PT Bank and General Mills

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

The idea behind PT Bank Mandiri and General Mills 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.