Correlation Between BANK MANDIRI and MITSUBISHI KAKOKI

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

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

Diversification Opportunities for BANK MANDIRI and MITSUBISHI KAKOKI

0.76

Correlation Coefficient

BANK MANDIRI  MITSUBISHI KAKOKI

Poor diversification

The 3 months correlation between BANK and MITSUBISHI is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and MITSUBISHI KAKOKI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MITSUBISHI KAKOKI 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 MITSUBISHI KAKOKI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MITSUBISHI KAKOKI has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and MITSUBISHI KAKOKI go up and down completely randomly.

Pair Corralation between BANK MANDIRI and MITSUBISHI KAKOKI

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the MITSUBISHI KAKOKI. In addition to that, BANK MANDIRI is 1.03 times more volatile than MITSUBISHI KAKOKI. It trades about -0.07 of its total potential returns per unit of risk. MITSUBISHI KAKOKI is currently generating about -0.04 per unit of volatility. If you would invest  2,140  in MITSUBISHI KAKOKI on August 31, 2024 and sell it today you would lose (160.00) from holding MITSUBISHI KAKOKI or give up 7.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

BANK MANDIRI  vs.  MITSUBISHI KAKOKI

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.

MITSUBISHI KAKOKI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MITSUBISHI KAKOKI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MITSUBISHI KAKOKI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANK MANDIRI and MITSUBISHI KAKOKI

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

The idea behind BANK MANDIRI and MITSUBISHI KAKOKI 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.