Correlation Between PT Bank and MAANSHAN IRON

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

Diversification Opportunities for PT Bank and MAANSHAN IRON

-0.55

Correlation Coefficient

PT Bank  MAANSHAN IRON

Excellent diversification

The 3 months correlation between PQ9 and MAANSHAN is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and MAANSHAN IRON H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAANSHAN IRON H 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 MAANSHAN IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAANSHAN IRON H has no effect on the direction of PT Bank i.e., PT Bank and MAANSHAN IRON go up and down completely randomly.

Pair Corralation between PT Bank and MAANSHAN IRON

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the MAANSHAN IRON. In addition to that, PT Bank is 1.34 times more volatile than MAANSHAN IRON H . It trades about -0.05 of its total potential returns per unit of risk. MAANSHAN IRON H is currently generating about 0.15 per unit of volatility. If you would invest  16.00  in MAANSHAN IRON H on December 21, 2024 and sell it today you would earn a total of  6.00  from holding MAANSHAN IRON H or generate 37.5% return on investment over 90 days.

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

PT Bank Mandiri  vs.  MAANSHAN IRON H

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.

MAANSHAN IRON H

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MAANSHAN IRON H are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, MAANSHAN IRON unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and MAANSHAN IRON

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

The idea behind PT Bank Mandiri and MAANSHAN IRON H 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.