Correlation Between BNP Paribas and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both BNP Paribas 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 BNP Paribas and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNP Paribas SA and Bank Mandiri Persero, you can compare the effects of market volatilities on BNP Paribas 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 BNP Paribas with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNP Paribas and Bank Mandiri.
Diversification Opportunities for BNP Paribas and Bank Mandiri
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BNP and Bank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BNP Paribas SA 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 BNP Paribas 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 BNP Paribas SA 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 BNP Paribas i.e., BNP Paribas and Bank Mandiri go up and down completely randomly.
Pair Corralation between BNP Paribas and Bank Mandiri
Assuming the 90 days horizon BNP Paribas SA is expected to under-perform the Bank Mandiri. In addition to that, BNP Paribas is 1.22 times more volatile than Bank Mandiri Persero. It trades about -0.04 of its total potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.04 per unit of volatility. If you would invest 1,470 in Bank Mandiri Persero on August 24, 2024 and sell it today you would earn a total of 106.00 from holding Bank Mandiri Persero or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BNP Paribas SA vs. Bank Mandiri Persero
Performance |
| Timeline |
| BNP Paribas SA |
| Bank Mandiri Persero |
BNP Paribas and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BNP Paribas and Bank Mandiri
The main advantage of trading using opposite BNP Paribas and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNP Paribas 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.| BNP Paribas vs. Lloyds Banking Group | BNP Paribas vs. Bank of Hawaii | BNP Paribas vs. Deutsche Bank AG | BNP Paribas vs. PNC Financial Services |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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