Correlation Between Merck and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Merck 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 Merck and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merck Company and Bank Mandiri Persero, you can compare the effects of market volatilities on Merck 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 Merck with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merck and Bank Mandiri.
Diversification Opportunities for Merck and Bank Mandiri
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merck and Bank is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Merck Company 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 Merck 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 Merck Company 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 Merck i.e., Merck and Bank Mandiri go up and down completely randomly.
Pair Corralation between Merck and Bank Mandiri
Considering the 90-day investment horizon Merck Company is expected to under-perform the Bank Mandiri. But the stock apears to be less risky and, when comparing its historical volatility, Merck Company is 1.43 times less risky than Bank Mandiri. The stock trades about 0.0 of its potential returns per unit of risk. The Bank Mandiri Persero is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,326 in Bank Mandiri Persero on August 27, 2024 and sell it today you would earn a total of 234.00 from holding Bank Mandiri Persero or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merck Company vs. Bank Mandiri Persero
Performance |
| Timeline |
| Merck Company |
| Bank Mandiri Persero |
Merck and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merck and Bank Mandiri
The main advantage of trading using opposite Merck and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merck 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.| Merck vs. Capricor Therapeutics | Merck vs. Soleno Therapeutics | Merck vs. Bio Path Holdings | Merck vs. Moleculin Biotech |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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