Correlation Between BANK MANDIRI and UNIVERSAL DISPLAY

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

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

Diversification Opportunities for BANK MANDIRI and UNIVERSAL DISPLAY

0.2

Correlation Coefficient

BANK MANDIRI  UNIVERSAL DISPLAY

Modest diversification

The 3 months correlation between BANK and UNIVERSAL is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and UNIVERSAL DISPLAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL DISPLAY 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 UNIVERSAL DISPLAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL DISPLAY has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and UNIVERSAL DISPLAY go up and down completely randomly.

Pair Corralation between BANK MANDIRI and UNIVERSAL DISPLAY

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the UNIVERSAL DISPLAY. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.05 times less risky than UNIVERSAL DISPLAY. The stock trades about -0.12 of its potential returns per unit of risk. The UNIVERSAL DISPLAY is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  14,436  in UNIVERSAL DISPLAY on December 22, 2024 and sell it today you would lose (686.00) from holding UNIVERSAL DISPLAY or give up 4.75% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  UNIVERSAL DISPLAY

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 uncertain 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.

UNIVERSAL DISPLAY

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNIVERSAL DISPLAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, UNIVERSAL DISPLAY is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BANK MANDIRI and UNIVERSAL DISPLAY

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

The idea behind BANK MANDIRI and UNIVERSAL DISPLAY 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.