Correlation Between Overseas Chinese and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Overseas Chinese 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 Overseas Chinese and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overseas Chinese Banking and Bank Mandiri Persero, you can compare the effects of market volatilities on Overseas Chinese 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 Overseas Chinese with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overseas Chinese and Bank Mandiri.
Diversification Opportunities for Overseas Chinese and Bank Mandiri
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Overseas and Bank is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Chinese Banking 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 Overseas Chinese 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 Overseas Chinese Banking 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 Overseas Chinese i.e., Overseas Chinese and Bank Mandiri go up and down completely randomly.
Pair Corralation between Overseas Chinese and Bank Mandiri
Assuming the 90 days horizon Overseas Chinese Banking is expected to generate 0.98 times more return on investment than Bank Mandiri. However, Overseas Chinese Banking is 1.02 times less risky than Bank Mandiri. It trades about 0.17 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.13 per unit of risk. If you would invest 2,401 in Overseas Chinese Banking on November 2, 2024 and sell it today you would earn a total of 162.00 from holding Overseas Chinese Banking or generate 6.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Overseas Chinese Banking vs. Bank Mandiri Persero
Performance |
| Timeline |
| Overseas Chinese Banking |
| Bank Mandiri Persero |
Overseas Chinese and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overseas Chinese and Bank Mandiri
The main advantage of trading using opposite Overseas Chinese and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overseas Chinese 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.| Overseas Chinese vs. Swedbank AB | Overseas Chinese vs. KBC Groep NV | Overseas Chinese vs. Nordea Bank Abp | Overseas Chinese vs. DBS Group Holdings |
| Bank Mandiri vs. Bank Rakyat | Bank Mandiri vs. Eurobank Ergasias Services | Bank Mandiri vs. Nedbank Group | Bank Mandiri vs. Standard Bank Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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