Correlation Between PT Bank and Mastercard Incorporated

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

Diversification Opportunities for PT Bank and Mastercard Incorporated

0.05

Correlation Coefficient

PT Bank  Mastercard Incorporated

Significant diversification

The 3 months correlation between PQ9 and Mastercard is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Mastercard Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard Incorporated 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 Mastercard Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard Incorporated has no effect on the direction of PT Bank i.e., PT Bank and Mastercard Incorporated go up and down completely randomly.

Pair Corralation between PT Bank and Mastercard Incorporated

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Mastercard Incorporated. In addition to that, PT Bank is 4.07 times more volatile than Mastercard Incorporated. It trades about -0.07 of its total potential returns per unit of risk. Mastercard Incorporated is currently generating about -0.01 per unit of volatility. If you would invest  50,260  in Mastercard Incorporated on December 22, 2024 and sell it today you would lose (865.00) from holding Mastercard Incorporated or give up 1.72% of portfolio value over 90 days.

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

PT Bank Mandiri  vs.  Mastercard Incorporated

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.

Mastercard Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mastercard Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Mastercard Incorporated is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Bank and Mastercard Incorporated

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

The idea behind PT Bank Mandiri and Mastercard Incorporated 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.