Correlation Between BANK MANDIRI and FedEx Corp

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

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

Diversification Opportunities for BANK MANDIRI and FedEx Corp

-0.54

Correlation Coefficient

BANK MANDIRI  FedEx Corp

Excellent diversification

The 3 months correlation between BANK and FedEx is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and FedEx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FedEx Corp 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 FedEx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FedEx Corp has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and FedEx Corp go up and down completely randomly.

Pair Corralation between BANK MANDIRI and FedEx Corp

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.25 times less return on investment than FedEx Corp. But when comparing it to its historical volatility, BANK MANDIRI is 1.19 times less risky than FedEx Corp. It trades about 0.01 of its potential returns per unit of risk. FedEx Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  26,530  in FedEx Corp on October 9, 2024 and sell it today you would lose (20.00) from holding FedEx Corp or give up 0.08% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  FedEx Corp

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 latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

FedEx Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FedEx Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, FedEx Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and FedEx Corp

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

The idea behind BANK MANDIRI and FedEx Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.