Correlation Between Bank Central and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Bank Mandiri Persero, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Bank Mandiri.
Diversification Opportunities for Bank Central and Bank Mandiri
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Bank is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia 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 Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and Bank Mandiri go up and down completely randomly.
Pair Corralation between Bank Central and Bank Mandiri
Assuming the 90 days horizon Bank Central is expected to generate 2.62 times less return on investment than Bank Mandiri. But when comparing it to its historical volatility, Bank Central Asia is 2.56 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 0.02 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Bank Mandiri Persero on September 1, 2024 and sell it today you would lose (1.00) from holding Bank Mandiri Persero or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Bank Central Asia vs. Bank Mandiri Persero
Performance |
| Timeline |
| Bank Central Asia |
| Bank Mandiri Persero |
Bank Central and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Bank Mandiri
The main advantage of trading using opposite Bank Central and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
| Bank Mandiri vs. Piraeus Bank SA | Bank Mandiri vs. Turkiye Garanti Bankasi | Bank Mandiri vs. Delhi Bank Corp | Bank Mandiri vs. Uwharrie Capital Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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