Correlation Between BANK MANDIRI and Schnitzer Steel

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

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

Diversification Opportunities for BANK MANDIRI and Schnitzer Steel

-0.32

Correlation Coefficient

BANK MANDIRI  Schnitzer Steel

Very good diversification

The 3 months correlation between BANK and Schnitzer is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Schnitzer Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schnitzer Steel Indu 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 Schnitzer Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schnitzer Steel Indu has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Schnitzer Steel go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Schnitzer Steel

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Schnitzer Steel. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.28 times less risky than Schnitzer Steel. The stock trades about -0.15 of its potential returns per unit of risk. The Schnitzer Steel Industries is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,514  in Schnitzer Steel Industries on October 6, 2024 and sell it today you would lose (84.00) from holding Schnitzer Steel Industries or give up 5.55% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Schnitzer Steel Industries

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.

Schnitzer Steel Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schnitzer Steel Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with BANK MANDIRI and Schnitzer Steel

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

The idea behind BANK MANDIRI and Schnitzer Steel Industries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.