Correlation Between Turk Telekomunikasyon and Bank Mandiri

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

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

Diversification Opportunities for Turk Telekomunikasyon and Bank Mandiri

-0.53

Correlation Coefficient

Turk Telekomunikasyon  Bank Mandiri

Excellent diversification

The 3 months correlation between Turk and Bank is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Turk Telekomunikasyon AS 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 Turk Telekomunikasyon 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 Turk Telekomunikasyon AS 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 Turk Telekomunikasyon i.e., Turk Telekomunikasyon and Bank Mandiri go up and down completely randomly.

Pair Corralation between Turk Telekomunikasyon and Bank Mandiri

Assuming the 90 days horizon Turk Telekomunikasyon AS is expected to generate 1.01 times more return on investment than Bank Mandiri. However, Turk Telekomunikasyon is 1.01 times more volatile than Bank Mandiri Persero. It trades about 0.1 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.06 per unit of risk. If you would invest  253.00  in Turk Telekomunikasyon AS on December 27, 2024 and sell it today you would earn a total of  41.00  from holding Turk Telekomunikasyon AS or generate 16.21% return on investment over 90 days.

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

Turk Telekomunikasyon AS  vs.  Bank Mandiri Persero

Turk Telekomunikasyon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Turk Telekomunikasyon AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Turk Telekomunikasyon showed solid returns over the last few months and may actually be approaching a breakup point.

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 Turk Telekomunikasyon and Bank Mandiri

The main advantage of trading using opposite Turk Telekomunikasyon and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Turk Telekomunikasyon 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 Turk Telekomunikasyon AS 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.