Correlation Between Bank Mandiri and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Microchip Technology 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 Microchip Technology 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 Microchip Technology, you can compare the effects of market volatilities on Bank Mandiri and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Microchip Technology.
Diversification Opportunities for Bank Mandiri and Microchip Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Microchip is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Microchip Technology go up and down completely randomly.
Pair Corralation between Bank Mandiri and Microchip Technology
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 6.59 times more return on investment than Microchip Technology. However, Bank Mandiri is 6.59 times more volatile than Microchip Technology. It trades about 0.06 of its potential returns per unit of risk. Microchip Technology is currently generating about 0.0 per unit of risk. If you would invest 31.00 in Bank Mandiri Persero on August 27, 2024 and sell it today you would earn a total of 8.00 from holding Bank Mandiri Persero or generate 25.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.73% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Microchip Technology
Performance |
| Timeline |
| Bank Mandiri Persero |
| Microchip Technology |
Bank Mandiri and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Microchip Technology
The main advantage of trading using opposite Bank Mandiri and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.The idea behind Bank Mandiri Persero and Microchip Technology 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.| Microchip Technology vs. Texas Instruments Incorporated | Microchip Technology vs. ON Semiconductor | Microchip Technology vs. Analog Devices | Microchip Technology vs. Qorvo Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |