Correlation Between Bank Mandiri and Bowmo
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Bowmo 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 Mandiri and Bowmo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Mandiri Persero and Bowmo Inc, you can compare the effects of market volatilities on Bank Mandiri and Bowmo 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 Mandiri with a short position of Bowmo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Bowmo.
Diversification Opportunities for Bank Mandiri and Bowmo
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Bowmo is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Bowmo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowmo Inc and Bank Mandiri 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 Mandiri Persero are associated (or correlated) with Bowmo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowmo Inc has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Bowmo go up and down completely randomly.
Pair Corralation between Bank Mandiri and Bowmo
Assuming the 90 days horizon Bank Mandiri is expected to generate 18.7 times less return on investment than Bowmo. But when comparing it to its historical volatility, Bank Mandiri Persero is 7.46 times less risky than Bowmo. It trades about 0.03 of its potential returns per unit of risk. Bowmo Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Bowmo Inc on August 27, 2024 and sell it today you would lose (9.75) from holding Bowmo Inc or give up 97.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 87.67% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Bowmo Inc
Performance |
| Timeline |
| Bank Mandiri Persero |
| Bowmo Inc |
Bank Mandiri and Bowmo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Bowmo
The main advantage of trading using opposite Bank Mandiri and Bowmo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Bowmo 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 Bowmo will offset losses from the drop in Bowmo's long position.The idea behind Bank Mandiri Persero and Bowmo Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stocks Directory module to find actively traded stocks across global markets.
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