Correlation Between BANK MANDIRI and Morgan Stanley

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

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

Diversification Opportunities for BANK MANDIRI and Morgan Stanley

0.52

Correlation Coefficient

BANK MANDIRI  Morgan Stanley

Very weak diversification

The 3 months correlation between BANK and Morgan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley 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 Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Morgan Stanley go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Morgan Stanley

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Morgan Stanley. In addition to that, BANK MANDIRI is 1.14 times more volatile than Morgan Stanley. It trades about -0.17 of its total potential returns per unit of risk. Morgan Stanley is currently generating about -0.03 per unit of volatility. If you would invest  11,764  in Morgan Stanley on December 20, 2024 and sell it today you would lose (638.00) from holding Morgan Stanley or give up 5.42% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Morgan Stanley

BANK MANDIRI

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Morgan Stanley

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BANK MANDIRI and Morgan Stanley

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

The idea behind BANK MANDIRI and Morgan Stanley 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.