Correlation Between Zions Bancorporation and Bank Mandiri

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

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

Diversification Opportunities for Zions Bancorporation and Bank Mandiri

0.61

Correlation Coefficient

Zions Bancorporation  Bank Mandiri

Poor diversification

The 3 months correlation between Zions and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Zions Bancorp. 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 Zions Bancorporation 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 Zions Bancorporation 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 Zions Bancorporation i.e., Zions Bancorporation and Bank Mandiri go up and down completely randomly.

Pair Corralation between Zions Bancorporation and Bank Mandiri

Given the investment horizon of 90 days Zions Bancorporation is expected to under-perform the Bank Mandiri. But the stock apears to be less risky and, when comparing its historical volatility, Zions Bancorporation is 3.37 times less risky than Bank Mandiri. The stock trades about -0.06 of its potential returns per unit of risk. The Bank Mandiri Persero is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Bank Mandiri Persero on December 28, 2024 and sell it today you would lose (4.00) from holding Bank Mandiri Persero or give up 11.43% of portfolio value over 90 days.

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

Zions Bancorp.  vs.  Bank Mandiri Persero

Zions Bancorporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zions Bancorporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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. Despite nearly stable basic indicators, Bank Mandiri is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Zions Bancorporation and Bank Mandiri

The main advantage of trading using opposite Zions Bancorporation and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zions Bancorporation 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 Zions Bancorporation 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.