Correlation Between Bank Mandiri and Fast Food
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Fast Food 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 Bank Mandiri and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Mandiri Persero and Fast Food Indonesia, you can compare the effects of market volatilities on Bank Mandiri and Fast Food 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 Bank Mandiri with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Fast Food.
Diversification Opportunities for Bank Mandiri and Fast Food
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and Fast is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Bank Mandiri 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 Bank Mandiri Persero are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Fast Food go up and down completely randomly.
Pair Corralation between Bank Mandiri and Fast Food
Assuming the 90 days trading horizon Bank Mandiri Persero is expected to generate 0.64 times more return on investment than Fast Food. However, Bank Mandiri Persero is 1.55 times less risky than Fast Food. It trades about 0.03 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.1 per unit of risk. If you would invest 563,673 in Bank Mandiri Persero on September 1, 2024 and sell it today you would earn a total of 51,327 from holding Bank Mandiri Persero or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Fast Food Indonesia
Performance |
| Timeline |
| Bank Mandiri Persero |
| Fast Food Indonesia |
Bank Mandiri and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Fast Food
The main advantage of trading using opposite Bank Mandiri and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food's long position.| Bank Mandiri vs. Bank Rakyat Indonesia | Bank Mandiri vs. Bank Central Asia | Bank Mandiri vs. Bank Negara Indonesia | Bank Mandiri vs. Astra International Tbk |
| Fast Food vs. Hero Supermarket Tbk | Fast Food vs. Indoritel Makmur Internasional | Fast Food vs. Enseval Putra Megatrading | Fast Food vs. Fks Multi Agro |
Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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