Correlation Between Bank Mandiri and Banco Santander
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Banco Santander 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 Banco Santander 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 Banco Santander Brasil, you can compare the effects of market volatilities on Bank Mandiri and Banco Santander 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 Banco Santander. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Banco Santander.
Diversification Opportunities for Bank Mandiri and Banco Santander
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Banco is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Banco Santander Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Santander Brasil 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 Banco Santander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Santander Brasil has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Banco Santander go up and down completely randomly.
Pair Corralation between Bank Mandiri and Banco Santander
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Banco Santander. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.07 times less risky than Banco Santander. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Banco Santander Brasil is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 506.00 in Banco Santander Brasil on August 28, 2024 and sell it today you would lose (45.00) from holding Banco Santander Brasil or give up 8.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Banco Santander Brasil
Performance |
| Timeline |
| Bank Mandiri Persero |
| Banco Santander Brasil |
Bank Mandiri and Banco Santander Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Banco Santander
The main advantage of trading using opposite Bank Mandiri and Banco Santander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Banco Santander 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 Banco Santander will offset losses from the drop in Banco Santander's long position.The idea behind Bank Mandiri Persero and Banco Santander Brasil 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.| Banco Santander vs. Banco De Chile | Banco Santander vs. CrossFirst Bankshares | Banco Santander vs. Banco Bradesco SA | Banco Santander vs. CF Bankshares |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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