Correlation Between BANK MANDIRI and Honeywell International

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Honeywell International 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 BANK MANDIRI and Honeywell International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK MANDIRI and Honeywell International, you can compare the effects of market volatilities on BANK MANDIRI and Honeywell International 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 BANK MANDIRI with a short position of Honeywell International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Honeywell International.

Diversification Opportunities for BANK MANDIRI and Honeywell International

-0.71

Correlation Coefficient

BANK MANDIRI  Honeywell International

Pay attention - limited upside

The 3 months correlation between BANK and Honeywell is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Honeywell International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Honeywell International and BANK MANDIRI 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 BANK MANDIRI are associated (or correlated) with Honeywell International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Honeywell International has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Honeywell International go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Honeywell International

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Honeywell International. In addition to that, BANK MANDIRI is 2.6 times more volatile than Honeywell International. It trades about -0.16 of its total potential returns per unit of risk. Honeywell International is currently generating about 0.0 per unit of volatility. If you would invest  21,980  in Honeywell International on September 23, 2024 and sell it today you would lose (35.00) from holding Honeywell International or give up 0.16% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Honeywell International

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Honeywell International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Honeywell International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Honeywell International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Honeywell International

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

The idea behind BANK MANDIRI and Honeywell International 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.

Check out your portfolio center.

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.