Correlation Between PT Bank and SOUTHERN COPPER

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

Diversification Opportunities for PT Bank and SOUTHERN COPPER

0.82

Correlation Coefficient

PT Bank  SOUTHERN COPPER

Very poor diversification

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

Pair Corralation between PT Bank and SOUTHERN COPPER

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the SOUTHERN COPPER. In addition to that, PT Bank is 2.77 times more volatile than SOUTHERN PER . It trades about -0.14 of its total potential returns per unit of risk. SOUTHERN PER is currently generating about -0.29 per unit of volatility. If you would invest  9,698  in SOUTHERN PER on October 8, 2024 and sell it today you would lose (822.00) from holding SOUTHERN PER or give up 8.48% 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.  SOUTHERN PER

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SOUTHERN COPPER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PT Bank and SOUTHERN COPPER

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

The idea behind PT Bank Mandiri and SOUTHERN PER 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.