Correlation Between Bank Mandiri and Haleon Plc
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Haleon Plc 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 Haleon Plc 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 Haleon plc, you can compare the effects of market volatilities on Bank Mandiri and Haleon Plc 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 Haleon Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Haleon Plc.
Diversification Opportunities for Bank Mandiri and Haleon Plc
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Haleon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Haleon plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon plc 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 Haleon Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon plc has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Haleon Plc go up and down completely randomly.
Pair Corralation between Bank Mandiri and Haleon Plc
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Haleon Plc. In addition to that, Bank Mandiri is 2.44 times more volatile than Haleon plc. It trades about -0.17 of its total potential returns per unit of risk. Haleon plc is currently generating about -0.03 per unit of volatility. If you would invest 480.00 in Haleon plc on August 27, 2024 and sell it today you would lose (6.00) from holding Haleon plc or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Haleon plc
Performance |
| Timeline |
| Bank Mandiri Persero |
| Haleon plc |
Bank Mandiri and Haleon Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Haleon Plc
The main advantage of trading using opposite Bank Mandiri and Haleon Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Haleon Plc 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 Haleon Plc will offset losses from the drop in Haleon Plc's long position.The idea behind Bank Mandiri Persero and Haleon plc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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