Correlation Between BANK MANDIRI and NATIONAL HEALTHCARE

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

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

Diversification Opportunities for BANK MANDIRI and NATIONAL HEALTHCARE

-0.21

Correlation Coefficient

BANK MANDIRI  NATIONAL HEALTHCARE

Very good diversification

The 3 months correlation between BANK and NATIONAL is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and NATIONAL HEALTHCARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL HEALTHCARE 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 NATIONAL HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL HEALTHCARE has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and NATIONAL HEALTHCARE go up and down completely randomly.

Pair Corralation between BANK MANDIRI and NATIONAL HEALTHCARE

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the NATIONAL HEALTHCARE. In addition to that, BANK MANDIRI is 2.74 times more volatile than NATIONAL HEALTHCARE. It trades about -0.03 of its total potential returns per unit of risk. NATIONAL HEALTHCARE is currently generating about -0.03 per unit of volatility. If you would invest  10,639  in NATIONAL HEALTHCARE on October 6, 2024 and sell it today you would lose (339.00) from holding NATIONAL HEALTHCARE or give up 3.19% 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.  NATIONAL HEALTHCARE

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.

NATIONAL HEALTHCARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL HEALTHCARE 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with BANK MANDIRI and NATIONAL HEALTHCARE

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

The idea behind BANK MANDIRI and NATIONAL HEALTHCARE 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.