Correlation Between PT Indofood and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both PT Indofood 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 PT Indofood and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indofood Sukses and Bank Mandiri Persero, you can compare the effects of market volatilities on PT Indofood 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 PT Indofood with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Bank Mandiri.
Diversification Opportunities for PT Indofood and Bank Mandiri
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INDF and Bank is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses 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 PT Indofood 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 PT Indofood Sukses 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 PT Indofood i.e., PT Indofood and Bank Mandiri go up and down completely randomly.
Pair Corralation between PT Indofood and Bank Mandiri
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.98 times more return on investment than Bank Mandiri. However, PT Indofood Sukses is 1.02 times less risky than Bank Mandiri. It trades about 0.02 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.07 per unit of risk. If you would invest 752,500 in PT Indofood Sukses on August 28, 2024 and sell it today you would earn a total of 2,500 from holding PT Indofood Sukses or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Bank Mandiri Persero
Performance |
| Timeline |
| PT Indofood Sukses |
| Bank Mandiri Persero |
PT Indofood and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Bank Mandiri
The main advantage of trading using opposite PT Indofood and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood 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.| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri Persero |
| Bank Mandiri vs. Bank Rakyat Indonesia | Bank Mandiri vs. Bank Central Asia | Bank Mandiri vs. Bank Negara Indonesia | Bank Mandiri vs. Astra International Tbk |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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