Correlation Between BANK MANDIRI and Kingfisher Plc

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

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

Diversification Opportunities for BANK MANDIRI and Kingfisher Plc

0.8

Correlation Coefficient

BANK MANDIRI  Kingfisher Plc

Very poor diversification

The 3 months correlation between BANK and Kingfisher is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Kingfisher plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingfisher plc 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 Kingfisher Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingfisher plc has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Kingfisher Plc go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Kingfisher Plc

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Kingfisher Plc. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.09 times less risky than Kingfisher Plc. The stock trades about -0.24 of its potential returns per unit of risk. The Kingfisher plc is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  378.00  in Kingfisher plc on September 22, 2024 and sell it today you would lose (77.00) from holding Kingfisher plc or give up 20.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.78%
Values	Daily Returns

BANK MANDIRI  vs.  Kingfisher plc

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.

Kingfisher plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingfisher plc 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 forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BANK MANDIRI and Kingfisher Plc

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

The idea behind BANK MANDIRI and Kingfisher plc 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.