Correlation Between Bank Mandiri and FDCTech
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and FDCTech 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 FDCTech 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 FDCTech, you can compare the effects of market volatilities on Bank Mandiri and FDCTech 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 FDCTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and FDCTech.
Diversification Opportunities for Bank Mandiri and FDCTech
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and FDCTech is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and FDCTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDCTech 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 FDCTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDCTech has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and FDCTech go up and down completely randomly.
Pair Corralation between Bank Mandiri and FDCTech
Assuming the 90 days horizon Bank Mandiri is expected to generate 81.12 times less return on investment than FDCTech. But when comparing it to its historical volatility, Bank Mandiri Persero is 30.06 times less risky than FDCTech. It trades about 0.05 of its potential returns per unit of risk. FDCTech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.70 in FDCTech on August 29, 2024 and sell it today you would lose (1.20) from holding FDCTech or give up 70.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. FDCTech
Performance |
| Timeline |
| Bank Mandiri Persero |
| FDCTech |
Bank Mandiri and FDCTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and FDCTech
The main advantage of trading using opposite Bank Mandiri and FDCTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, FDCTech 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 FDCTech will offset losses from the drop in FDCTech's long position.The idea behind Bank Mandiri Persero and FDCTech 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.| FDCTech vs. Morgan Stanley | FDCTech vs. Goldman Sachs Group | FDCTech vs. Charles Schwab Corp | FDCTech vs. Interactive Brokers 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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