Correlation Between Bank Mandiri and West Red
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and West Red 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 West Red 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 West Red Lake, you can compare the effects of market volatilities on Bank Mandiri and West Red 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 West Red. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and West Red.
Diversification Opportunities for Bank Mandiri and West Red
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and West is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and West Red Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Red Lake 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 West Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Red Lake has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and West Red go up and down completely randomly.
Pair Corralation between Bank Mandiri and West Red
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 1.32 times more return on investment than West Red. However, Bank Mandiri is 1.32 times more volatile than West Red Lake. It trades about 0.02 of its potential returns per unit of risk. West Red Lake is currently generating about -0.02 per unit of risk. If you would invest 39.00 in Bank Mandiri Persero on September 5, 2024 and sell it today you would earn a total of 0.00 from holding Bank Mandiri Persero or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Bank Mandiri Persero vs. West Red Lake
Performance |
| Timeline |
| Bank Mandiri Persero |
| West Red Lake |
Bank Mandiri and West Red Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and West Red
The main advantage of trading using opposite Bank Mandiri and West Red positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, West Red 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 West Red will offset losses from the drop in West Red's long position.| Bank Mandiri vs. First Hawaiian | Bank Mandiri vs. Central Pacific Financial | Bank Mandiri vs. Territorial Bancorp | Bank Mandiri vs. Comerica |
| West Red vs. Turning Point Brands | West Red vs. Tyson Foods | West Red vs. Fidus Investment Corp | West Red vs. Ambev SA ADR |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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