Correlation Between BANK MANDIRI and Siemens Healthineers

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

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

Diversification Opportunities for BANK MANDIRI and Siemens Healthineers

-0.38

Correlation Coefficient

BANK MANDIRI  Siemens Healthineers

Very good diversification

The 3 months correlation between BANK and Siemens is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Siemens Healthineers AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Healthineers 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 Siemens Healthineers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Healthineers has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Siemens Healthineers go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Siemens Healthineers

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 2.47 times more return on investment than Siemens Healthineers. However, BANK MANDIRI is 2.47 times more volatile than Siemens Healthineers AG. It trades about 0.01 of its potential returns per unit of risk. Siemens Healthineers AG is currently generating about -0.09 per unit of risk. If you would invest  35.00  in BANK MANDIRI on October 10, 2024 and sell it today you would earn a total of  0.00  from holding BANK MANDIRI or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

BANK MANDIRI  vs.  Siemens Healthineers AG

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.

Siemens Healthineers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BANK MANDIRI and Siemens Healthineers

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

The idea behind BANK MANDIRI and Siemens Healthineers AG 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 Stocks Directory module to find actively traded stocks across global markets.