Correlation Between CVS Health and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both CVS Health 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 CVS Health and BANK MANDIRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVS Health and BANK MANDIRI, you can compare the effects of market volatilities on CVS Health 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 CVS Health with a short position of BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVS Health and BANK MANDIRI.
Diversification Opportunities for CVS Health and BANK MANDIRI
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVS and BANK is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding CVS Health and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and CVS Health 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 CVS Health 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 has no effect on the direction of CVS Health i.e., CVS Health and BANK MANDIRI go up and down completely randomly.
Pair Corralation between CVS Health and BANK MANDIRI
Assuming the 90 days trading horizon CVS Health is expected to generate 0.92 times more return on investment than BANK MANDIRI. However, CVS Health is 1.09 times less risky than BANK MANDIRI. It trades about 0.02 of its potential returns per unit of risk. BANK MANDIRI is currently generating about 0.01 per unit of risk. If you would invest 5,223 in CVS Health on September 12, 2024 and sell it today you would earn a total of 28.00 from holding CVS Health or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVS Health vs. BANK MANDIRI
Performance |
| Timeline |
| CVS Health |
| BANK MANDIRI |
CVS Health and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVS Health and BANK MANDIRI
The main advantage of trading using opposite CVS Health and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVS Health 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.The idea behind CVS Health and BANK MANDIRI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| BANK MANDIRI vs. NURAN WIRELESS INC | BANK MANDIRI vs. Summit Hotel Properties | BANK MANDIRI vs. KENEDIX OFFICE INV | BANK MANDIRI vs. Pebblebrook Hotel Trust |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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