Correlation Between Toyo Suisan and Bank Mandiri

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

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

Diversification Opportunities for Toyo Suisan and Bank Mandiri

-0.05

Correlation Coefficient

Toyo Suisan  Bank Mandiri

Good diversification

The 3 months correlation between Toyo and Bank is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Toyo Suisan Kaisha 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 Toyo Suisan 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 Toyo Suisan Kaisha 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 Toyo Suisan i.e., Toyo Suisan and Bank Mandiri go up and down completely randomly.

Pair Corralation between Toyo Suisan and Bank Mandiri

Assuming the 90 days horizon Toyo Suisan Kaisha is expected to generate 2.24 times more return on investment than Bank Mandiri. However, Toyo Suisan is 2.24 times more volatile than Bank Mandiri Persero. It trades about 0.03 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.11 per unit of risk. If you would invest  6,410  in Toyo Suisan Kaisha on September 1, 2024 and sell it today you would earn a total of  226.00  from holding Toyo Suisan Kaisha or generate 3.53% return on investment over 90 days.

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

Toyo Suisan Kaisha  vs.  Bank Mandiri Persero

Toyo Suisan Kaisha

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Toyo Suisan Kaisha are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Toyo Suisan may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Bank Mandiri Persero

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Toyo Suisan and Bank Mandiri

The main advantage of trading using opposite Toyo Suisan and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toyo Suisan 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 Toyo Suisan Kaisha 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 Transaction History module to view history of all your transactions and understand their impact on performance.