Correlation Between BANK MANDIRI and Waste Connections

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

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

Diversification Opportunities for BANK MANDIRI and Waste Connections

-0.66

Correlation Coefficient

BANK MANDIRI  Waste Connections

Excellent diversification

The 3 months correlation between BANK and Waste is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections 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 Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Waste Connections go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Waste Connections

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 3.6 times more return on investment than Waste Connections. However, BANK MANDIRI is 3.6 times more volatile than Waste Connections. It trades about 0.03 of its potential returns per unit of risk. Waste Connections is currently generating about 0.07 per unit of risk. If you would invest  28.00  in BANK MANDIRI on September 2, 2024 and sell it today you would earn a total of  5.00  from holding BANK MANDIRI or generate 17.86% return on investment over 90 days.

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

BANK MANDIRI  vs.  Waste Connections

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.

Waste Connections

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Waste Connections may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BANK MANDIRI and Waste Connections

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

The idea behind BANK MANDIRI and Waste Connections 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.