Correlation Between United Tractors and Bank Mandiri

Can any of the company-specific risk be diversified away by investing in both United Tractors and Bank Mandiri 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 United Tractors and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Tractors Tbk and Bank Mandiri Persero, you can compare the effects of market volatilities on United Tractors and Bank Mandiri 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 United Tractors with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tractors and Bank Mandiri.

Diversification Opportunities for United Tractors and Bank Mandiri

0.77

Correlation Coefficient

United Tractors  Bank Mandiri

Poor diversification

The 3 months correlation between United and Bank is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Tractors Tbk and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero and United Tractors 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 United Tractors Tbk are associated (or correlated) with Bank Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mandiri Persero has no effect on the direction of United Tractors i.e., United Tractors and Bank Mandiri go up and down completely randomly.

Pair Corralation between United Tractors and Bank Mandiri

Assuming the 90 days horizon United Tractors Tbk is expected to under-perform the Bank Mandiri. In addition to that, United Tractors is 1.14 times more volatile than Bank Mandiri Persero. It trades about -0.08 of its total potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.04 per unit of volatility. If you would invest  1,385  in Bank Mandiri Persero on December 28, 2024 and sell it today you would lose (138.00) from holding Bank Mandiri Persero or give up 9.96% of portfolio value over 90 days.

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

United Tractors Tbk  vs.  Bank Mandiri Persero

United Tractors Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Tractors Tbk 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 forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bank Mandiri Persero

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Mandiri Persero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with United Tractors and Bank Mandiri

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

The idea behind United Tractors Tbk and Bank Mandiri Persero 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.