Correlation Between BANK MANDIRI and JJ SNACK

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

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

Diversification Opportunities for BANK MANDIRI and JJ SNACK

0.65

Correlation Coefficient

BANK MANDIRI  JJ SNACK

Poor diversification

The 3 months correlation between BANK and JJ1 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 JJ SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and JJ SNACK go up and down completely randomly.

Pair Corralation between BANK MANDIRI and JJ SNACK

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 2.74 times more return on investment than JJ SNACK. However, BANK MANDIRI is 2.74 times more volatile than JJ SNACK FOODS. It trades about -0.01 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about -0.2 per unit of risk. If you would invest  32.00  in BANK MANDIRI on November 20, 2024 and sell it today you would lose (4.00) from holding BANK MANDIRI or give up 12.5% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  JJ SNACK FOODS

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 comparatively stable basic indicators, BANK MANDIRI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

JJ SNACK FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days JJ SNACK FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with BANK MANDIRI and JJ SNACK

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

The idea behind BANK MANDIRI and JJ SNACK FOODS 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.