Correlation Between Commercial Vehicle and BANK MANDIRI
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and BANK MANDIRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and BANK MANDIRI, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and BANK MANDIRI.
Diversification Opportunities for Commercial Vehicle and BANK MANDIRI
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commercial and BANK is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and Commercial Vehicle 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 Commercial Vehicle Group 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 Commercial Vehicle i.e., Commercial Vehicle and BANK MANDIRI go up and down completely randomly.
Pair Corralation between Commercial Vehicle and BANK MANDIRI
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the BANK MANDIRI. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 1.21 times less risky than BANK MANDIRI. The stock trades about -0.1 of its potential returns per unit of risk. The BANK MANDIRI is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 34.00 in BANK MANDIRI on December 9, 2024 and sell it today you would lose (11.00) from holding BANK MANDIRI or give up 32.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. BANK MANDIRI
Performance |
| Timeline |
| Commercial Vehicle |
| BANK MANDIRI |
Commercial Vehicle and BANK MANDIRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and BANK MANDIRI
The main advantage of trading using opposite Commercial Vehicle and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Live Nation Entertainment | ||
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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 CEOs Directory module to screen CEOs from public companies around the world.
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