Correlation Between SCOTT TECHNOLOGY and BANK MANDIRI

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

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

Diversification Opportunities for SCOTT TECHNOLOGY and BANK MANDIRI

-0.52

Correlation Coefficient

SCOTT TECHNOLOGY  BANK MANDIRI

Excellent diversification

The 3 months correlation between SCOTT and BANK is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding SCOTT TECHNOLOGY and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY 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 has no effect on the direction of SCOTT TECHNOLOGY i.e., SCOTT TECHNOLOGY and BANK MANDIRI go up and down completely randomly.

Pair Corralation between SCOTT TECHNOLOGY and BANK MANDIRI

Assuming the 90 days trading horizon SCOTT TECHNOLOGY is expected to generate 13.6 times less return on investment than BANK MANDIRI. But when comparing it to its historical volatility, SCOTT TECHNOLOGY is 1.38 times less risky than BANK MANDIRI. It trades about 0.0 of its potential returns per unit of risk. BANK MANDIRI is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  27.00  in BANK MANDIRI on October 24, 2024 and sell it today you would earn a total of  5.00  from holding BANK MANDIRI or generate 18.52% return on investment over 90 days.

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

SCOTT TECHNOLOGY  vs.  BANK MANDIRI

SCOTT TECHNOLOGY

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical indicators, SCOTT TECHNOLOGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady 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.

Pair Trading with SCOTT TECHNOLOGY and BANK MANDIRI

The main advantage of trading using opposite SCOTT TECHNOLOGY and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY and BANK MANDIRI 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.