Correlation Between Bank Mandiri and SITC International
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and SITC International 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 SITC International 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 SITC International Holdings, you can compare the effects of market volatilities on Bank Mandiri and SITC International 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 SITC International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and SITC International.
Diversification Opportunities for Bank Mandiri and SITC International
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and SITC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and SITC International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITC International 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 SITC International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITC International has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and SITC International go up and down completely randomly.
Pair Corralation between Bank Mandiri and SITC International
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 2.83 times more return on investment than SITC International. However, Bank Mandiri is 2.83 times more volatile than SITC International Holdings. It trades about 0.06 of its potential returns per unit of risk. SITC International Holdings is currently generating about 0.08 per unit of risk. If you would invest 29.00 in Bank Mandiri Persero on August 30, 2024 and sell it today you would earn a total of 15.00 from holding Bank Mandiri Persero or generate 51.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.73% |
| Values | Daily Returns |
Bank Mandiri Persero vs. SITC International Holdings
Performance |
| Timeline |
| Bank Mandiri Persero |
| SITC International |
Bank Mandiri and SITC International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and SITC International
The main advantage of trading using opposite Bank Mandiri and SITC International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, SITC International 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 SITC International will offset losses from the drop in SITC International's long position.The idea behind Bank Mandiri Persero and SITC International Holdings 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.| SITC International vs. COSCO SHIPPING Development | SITC International vs. COSCO SHIPPING Holdings | SITC International vs. Nippon Yusen Kabushiki | SITC International vs. Western Bulk Chartering |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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