Correlation Between Bank Mandiri and Indo Pureco
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Indo Pureco 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 Indo Pureco 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 Indo Pureco Pratama, you can compare the effects of market volatilities on Bank Mandiri and Indo Pureco 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 Indo Pureco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Indo Pureco.
Diversification Opportunities for Bank Mandiri and Indo Pureco
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Indo is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Indo Pureco Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Pureco Pratama 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 Indo Pureco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Pureco Pratama has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Indo Pureco go up and down completely randomly.
Pair Corralation between Bank Mandiri and Indo Pureco
Assuming the 90 days trading horizon Bank Mandiri Persero is expected to generate 0.4 times more return on investment than Indo Pureco. However, Bank Mandiri Persero is 2.52 times less risky than Indo Pureco. It trades about 0.04 of its potential returns per unit of risk. Indo Pureco Pratama is currently generating about -0.11 per unit of risk. If you would invest 492,173 in Bank Mandiri Persero on August 25, 2024 and sell it today you would earn a total of 132,827 from holding Bank Mandiri Persero or generate 26.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.37% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Indo Pureco Pratama
Performance |
| Timeline |
| Bank Mandiri Persero |
| Indo Pureco Pratama |
Bank Mandiri and Indo Pureco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Indo Pureco
The main advantage of trading using opposite Bank Mandiri and Indo Pureco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Indo Pureco 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 Indo Pureco will offset losses from the drop in Indo Pureco'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 |
| Indo Pureco vs. Bank Central Asia | Indo Pureco vs. Bank Rakyat Indonesia | Indo Pureco vs. Bayan Resources Tbk | Indo Pureco vs. Bank Mandiri Persero |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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