Correlation Between Bank Mandiri and Crimson Wine
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Crimson Wine 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 Crimson Wine 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 Crimson Wine, you can compare the effects of market volatilities on Bank Mandiri and Crimson Wine 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 Crimson Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Crimson Wine.
Diversification Opportunities for Bank Mandiri and Crimson Wine
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Crimson is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Crimson Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crimson Wine 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 Crimson Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crimson Wine has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Crimson Wine go up and down completely randomly.
Pair Corralation between Bank Mandiri and Crimson Wine
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Crimson Wine. In addition to that, Bank Mandiri is 1.1 times more volatile than Crimson Wine. It trades about -0.28 of its total potential returns per unit of risk. Crimson Wine is currently generating about -0.08 per unit of volatility. If you would invest 682.00 in Crimson Wine on August 28, 2024 and sell it today you would lose (22.00) from holding Crimson Wine or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Crimson Wine
Performance |
| Timeline |
| Bank Mandiri Persero |
| Crimson Wine |
Bank Mandiri and Crimson Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Crimson Wine
The main advantage of trading using opposite Bank Mandiri and Crimson Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Crimson Wine 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 Crimson Wine will offset losses from the drop in Crimson Wine's long position.The idea behind Bank Mandiri Persero and Crimson Wine 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.| Crimson Wine vs. Pernod Ricard SA | Crimson Wine vs. Naked Wines plc | Crimson Wine vs. Willamette Valley Vineyards | Crimson Wine vs. Brown Forman |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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