Correlation Between Bank Mandiri and Headwater Exploration
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Headwater Exploration 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 Headwater Exploration 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 Headwater Exploration, you can compare the effects of market volatilities on Bank Mandiri and Headwater Exploration 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 Headwater Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Headwater Exploration.
Diversification Opportunities for Bank Mandiri and Headwater Exploration
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Headwater is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Headwater Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Headwater Exploration 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 Headwater Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Headwater Exploration has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Headwater Exploration go up and down completely randomly.
Pair Corralation between Bank Mandiri and Headwater Exploration
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Headwater Exploration. In addition to that, Bank Mandiri is 1.18 times more volatile than Headwater Exploration. It trades about -0.11 of its total potential returns per unit of risk. Headwater Exploration is currently generating about -0.01 per unit of volatility. If you would invest 492.00 in Headwater Exploration on September 1, 2024 and sell it today you would lose (4.00) from holding Headwater Exploration or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Headwater Exploration
Performance |
| Timeline |
| Bank Mandiri Persero |
| Headwater Exploration |
Bank Mandiri and Headwater Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Headwater Exploration
The main advantage of trading using opposite Bank Mandiri and Headwater Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Headwater Exploration 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 Headwater Exploration will offset losses from the drop in Headwater Exploration's long position.| Bank Mandiri vs. Piraeus Bank SA | Bank Mandiri vs. Turkiye Garanti Bankasi | Bank Mandiri vs. Delhi Bank Corp | Bank Mandiri vs. Uwharrie Capital Corp |
| Headwater Exploration vs. ROK Resources | Headwater Exploration vs. Pieridae Energy Limited | Headwater Exploration vs. Kelt Exploration | Headwater Exploration vs. Athabasca Oil Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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