Correlation Between Bank Mandiri and Indospring Tbk
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Indospring Tbk 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 Indospring Tbk 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 Indospring Tbk, you can compare the effects of market volatilities on Bank Mandiri and Indospring Tbk 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 Indospring Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Indospring Tbk.
Diversification Opportunities for Bank Mandiri and Indospring Tbk
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Indospring is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Indospring Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indospring Tbk 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 Indospring Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indospring Tbk has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Indospring Tbk go up and down completely randomly.
Pair Corralation between Bank Mandiri and Indospring Tbk
Assuming the 90 days trading horizon Bank Mandiri Persero is expected to under-perform the Indospring Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.09 times less risky than Indospring Tbk. The stock trades about -0.34 of its potential returns per unit of risk. The Indospring Tbk is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 23,800 in Indospring Tbk on November 27, 2024 and sell it today you would lose (1,200) from holding Indospring Tbk or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Indospring Tbk
Performance |
| Timeline |
| Bank Mandiri Persero |
| Indospring Tbk |
Bank Mandiri and Indospring Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Indospring Tbk
The main advantage of trading using opposite Bank Mandiri and Indospring Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Indospring Tbk 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 Indospring Tbk will offset losses from the drop in Indospring Tbk'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 |
| Indospring Tbk vs. Indomobil Sukses Internasional | Indospring Tbk vs. Goodyear Indonesia Tbk | Indospring Tbk vs. Indorama Synthetics Tbk | Indospring Tbk vs. Astra Otoparts Tbk |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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