Correlation Between Bank Mandiri and Mandom Indonesia
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Mandom Indonesia 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 Mandom Indonesia 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 Mandom Indonesia Tbk, you can compare the effects of market volatilities on Bank Mandiri and Mandom Indonesia 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 Mandom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Mandom Indonesia.
Diversification Opportunities for Bank Mandiri and Mandom Indonesia
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Mandom is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Mandom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mandom Indonesia 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 Mandom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mandom Indonesia Tbk has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Mandom Indonesia go up and down completely randomly.
Pair Corralation between Bank Mandiri and Mandom Indonesia
Assuming the 90 days trading horizon Bank Mandiri Persero is expected to generate 0.71 times more return on investment than Mandom Indonesia. However, Bank Mandiri Persero is 1.42 times less risky than Mandom Indonesia. It trades about 0.05 of its potential returns per unit of risk. Mandom Indonesia Tbk is currently generating about -0.01 per unit of risk. If you would invest 448,047 in Bank Mandiri Persero on September 3, 2024 and sell it today you would earn a total of 166,953 from holding Bank Mandiri Persero or generate 37.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Mandom Indonesia Tbk
Performance |
| Timeline |
| Bank Mandiri Persero |
| Mandom Indonesia Tbk |
Bank Mandiri and Mandom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Mandom Indonesia
The main advantage of trading using opposite Bank Mandiri and Mandom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Mandom Indonesia 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 Mandom Indonesia will offset losses from the drop in Mandom Indonesia'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 |
| Mandom Indonesia vs. Astra International Tbk | Mandom Indonesia vs. Unilever Indonesia Tbk | Mandom Indonesia vs. Telkom Indonesia Tbk | Mandom Indonesia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |