Correlation Between Bank Mandiri and Arch Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Arch Therapeutics 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 Arch Therapeutics 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 Arch Therapeutics, you can compare the effects of market volatilities on Bank Mandiri and Arch Therapeutics 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 Arch Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Arch Therapeutics.
Diversification Opportunities for Bank Mandiri and Arch Therapeutics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Arch is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Arch Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arch Therapeutics 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 Arch Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arch Therapeutics has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Arch Therapeutics go up and down completely randomly.
Pair Corralation between Bank Mandiri and Arch Therapeutics
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.21 times more return on investment than Arch Therapeutics. However, Bank Mandiri Persero is 4.88 times less risky than Arch Therapeutics. It trades about -0.2 of its potential returns per unit of risk. Arch Therapeutics is currently generating about -0.18 per unit of risk. If you would invest 1,715 in Bank Mandiri Persero on September 3, 2024 and sell it today you would lose (151.00) from holding Bank Mandiri Persero or give up 8.8% 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. Arch Therapeutics
Performance |
| Timeline |
| Bank Mandiri Persero |
| Arch Therapeutics |
Bank Mandiri and Arch Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Arch Therapeutics
The main advantage of trading using opposite Bank Mandiri and Arch Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Arch Therapeutics 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 Arch Therapeutics will offset losses from the drop in Arch Therapeutics' long position.| Bank Mandiri vs. Bank Rakyat | Bank Mandiri vs. Eurobank Ergasias Services | Bank Mandiri vs. Nedbank Group | Bank Mandiri vs. Standard Bank Group |
| Arch Therapeutics vs. biOasis Technologies | Arch Therapeutics vs. Antibe Therapeutics | Arch Therapeutics vs. Awakn Life Sciences | Arch Therapeutics vs. Cellectis SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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