Correlation Between Bank Mandiri and BC Craft
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and BC Craft 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 BC Craft 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 BC Craft Supply, you can compare the effects of market volatilities on Bank Mandiri and BC Craft 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 BC Craft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and BC Craft.
Diversification Opportunities for Bank Mandiri and BC Craft
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and CRFTF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and BC Craft Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC Craft Supply 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 BC Craft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC Craft Supply has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and BC Craft go up and down completely randomly.
Pair Corralation between Bank Mandiri and BC Craft
Assuming the 90 days horizon Bank Mandiri is expected to generate 46.78 times less return on investment than BC Craft. But when comparing it to its historical volatility, Bank Mandiri Persero is 23.35 times less risky than BC Craft. It trades about 0.03 of its potential returns per unit of risk. BC Craft Supply is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 53.00 in BC Craft Supply on October 25, 2024 and sell it today you would lose (52.99) from holding BC Craft Supply or give up 99.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Bank Mandiri Persero vs. BC Craft Supply
Performance |
| Timeline |
| Bank Mandiri Persero |
| BC Craft Supply |
Bank Mandiri and BC Craft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and BC Craft
The main advantage of trading using opposite Bank Mandiri and BC Craft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, BC Craft 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 BC Craft will offset losses from the drop in BC Craft's long position.| Bank Mandiri vs. Bank Rakyat | Bank Mandiri vs. Eurobank Ergasias Services | Bank Mandiri vs. Nedbank Group | Bank Mandiri vs. Standard Bank Group |
| BC Craft vs. Benchmark Botanics | BC Craft vs. Speakeasy Cannabis Club | BC Craft vs. City View Green | BC Craft vs. Ravenquest Biomed |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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