Correlation Between BANK MANDIRI and S A P

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

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

Diversification Opportunities for BANK MANDIRI and S A P

-0.73

Correlation Coefficient

BANK MANDIRI  S A P

Pay attention - limited upside

The 3 months correlation between BANK and SAP is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and S A P go up and down completely randomly.

Pair Corralation between BANK MANDIRI and S A P

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the S A P. In addition to that, BANK MANDIRI is 1.79 times more volatile than SAP SE. It trades about -0.08 of its total potential returns per unit of risk. SAP SE is currently generating about 0.15 per unit of volatility. If you would invest  19,986  in SAP SE on September 1, 2024 and sell it today you would earn a total of  2,504  from holding SAP SE or generate 12.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

BANK MANDIRI  vs.  SAP SE

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.

SAP SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BANK MANDIRI and S A P

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

The idea behind BANK MANDIRI and SAP SE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.