Correlation Between BANK MANDIRI and Park Hotels

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

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

Diversification Opportunities for BANK MANDIRI and Park Hotels

0.73

Correlation Coefficient

BANK MANDIRI  Park Hotels

Poor diversification

The 3 months correlation between BANK and Park is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Park Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Hotels Resorts 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 Park Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Hotels Resorts has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Park Hotels go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Park Hotels

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.02 times more return on investment than Park Hotels. However, BANK MANDIRI is 1.02 times more volatile than Park Hotels Resorts. It trades about -0.19 of its potential returns per unit of risk. Park Hotels Resorts is currently generating about -0.2 per unit of risk. If you would invest  34.00  in BANK MANDIRI on December 26, 2024 and sell it today you would lose (7.00) from holding BANK MANDIRI or give up 20.59% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Park Hotels Resorts

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.

Park Hotels Resorts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Park Hotels Resorts 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.

Pair Trading with BANK MANDIRI and Park Hotels

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

The idea behind BANK MANDIRI and Park Hotels Resorts 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.