Correlation Between China Merchants and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both China Merchants 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 China Merchants and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Merchants Bank and Bank Mandiri Persero, you can compare the effects of market volatilities on China Merchants 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 China Merchants with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Merchants and Bank Mandiri.
Diversification Opportunities for China Merchants and Bank Mandiri
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Bank is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding China Merchants Bank 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 China Merchants 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 China Merchants Bank 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 China Merchants i.e., China Merchants and Bank Mandiri go up and down completely randomly.
Pair Corralation between China Merchants and Bank Mandiri
Assuming the 90 days horizon China Merchants Bank is expected to generate 3.28 times more return on investment than Bank Mandiri. However, China Merchants is 3.28 times more volatile than Bank Mandiri Persero. It trades about 0.02 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.03 per unit of risk. If you would invest 523.00 in China Merchants Bank on August 27, 2024 and sell it today you would lose (53.00) from holding China Merchants Bank or give up 10.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.75% |
| Values | Daily Returns |
China Merchants Bank vs. Bank Mandiri Persero
Performance |
| Timeline |
| China Merchants Bank |
| Bank Mandiri Persero |
China Merchants and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Merchants and Bank Mandiri
The main advantage of trading using opposite China Merchants and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Merchants 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.| China Merchants vs. Postal Savings Bank | China Merchants vs. China Merchants Bank | China Merchants vs. Community West Bancshares | China Merchants vs. Bangkok Bank PCL |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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