Correlation Between Bank Mandiri and China Resources
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and China Resources 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 China Resources 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 China Resources Cement, you can compare the effects of market volatilities on Bank Mandiri and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and China Resources.
Diversification Opportunities for Bank Mandiri and China Resources
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and China is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and China Resources Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Cement 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Cement has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and China Resources go up and down completely randomly.
Pair Corralation between Bank Mandiri and China Resources
Assuming the 90 days horizon Bank Mandiri is expected to generate 4.18 times less return on investment than China Resources. But when comparing it to its historical volatility, Bank Mandiri Persero is 2.28 times less risky than China Resources. It trades about 0.04 of its potential returns per unit of risk. China Resources Cement is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 572.00 in China Resources Cement on September 3, 2024 and sell it today you would earn a total of 163.00 from holding China Resources Cement or generate 28.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. China Resources Cement
Performance |
| Timeline |
| Bank Mandiri Persero |
| China Resources Cement |
Bank Mandiri and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and China Resources
The main advantage of trading using opposite Bank Mandiri and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Bank Mandiri vs. Bank Rakyat | Bank Mandiri vs. Eurobank Ergasias Services | Bank Mandiri vs. Nedbank Group | Bank Mandiri vs. Standard Bank Group |
| China Resources vs. Cementos Pacasmayo SAA | China Resources vs. Summit Materials | China Resources vs. Eagle Materials | China Resources vs. CRH PLC 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 CEOs Directory module to screen CEOs from public companies around the world.
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