Correlation Between BANK MANDIRI and OSRAM LICHT

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

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

Diversification Opportunities for BANK MANDIRI and OSRAM LICHT

-0.3

Correlation Coefficient

BANK MANDIRI  OSRAM LICHT

Very good diversification

The 3 months correlation between BANK and OSRAM is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N 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 OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and OSRAM LICHT go up and down completely randomly.

Pair Corralation between BANK MANDIRI and OSRAM LICHT

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 9.38 times more return on investment than OSRAM LICHT. However, BANK MANDIRI is 9.38 times more volatile than OSRAM LICHT N. It trades about 0.02 of its potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.04 per unit of risk. If you would invest  27.00  in BANK MANDIRI on October 10, 2024 and sell it today you would earn a total of  2.00  from holding BANK MANDIRI or generate 7.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

BANK MANDIRI  vs.  OSRAM LICHT N

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

OSRAM LICHT N

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OSRAM LICHT N are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, OSRAM LICHT is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BANK MANDIRI and OSRAM LICHT

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

The idea behind BANK MANDIRI and OSRAM LICHT N 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.