Correlation Between PT Bank and Marks

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

Diversification Opportunities for PT Bank and Marks

-0.35

Correlation Coefficient

PT Bank  Marks

Very good diversification

The 3 months correlation between PQ9 and Marks is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of PT Bank i.e., PT Bank and Marks go up and down completely randomly.

Pair Corralation between PT Bank and Marks

Assuming the 90 days horizon PT Bank is expected to generate 2.15 times less return on investment than Marks. In addition to that, PT Bank is 1.85 times more volatile than Marks and Spencer. It trades about 0.03 of its total potential returns per unit of risk. Marks and Spencer is currently generating about 0.11 per unit of volatility. If you would invest  133.00  in Marks and Spencer on September 23, 2024 and sell it today you would earn a total of  327.00  from holding Marks and Spencer or generate 245.86% return on investment over 90 days.

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

PT Bank Mandiri  vs.  Marks and Spencer

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Marks and Spencer

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marks and Spencer are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Marks is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Marks

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

The idea behind PT Bank Mandiri and Marks and Spencer 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.