Correlation Between Bank Mandiri and Ecopetrol
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Ecopetrol 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 Ecopetrol 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 Ecopetrol SA ADR, you can compare the effects of market volatilities on Bank Mandiri and Ecopetrol 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 Ecopetrol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Ecopetrol.
Diversification Opportunities for Bank Mandiri and Ecopetrol
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Ecopetrol is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Ecopetrol SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopetrol SA ADR 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 Ecopetrol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopetrol SA ADR has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Ecopetrol go up and down completely randomly.
Pair Corralation between Bank Mandiri and Ecopetrol
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 1.09 times more return on investment than Ecopetrol. However, Bank Mandiri is 1.09 times more volatile than Ecopetrol SA ADR. It trades about 0.06 of its potential returns per unit of risk. Ecopetrol SA ADR is currently generating about -0.15 per unit of risk. If you would invest 1,440 in Bank Mandiri Persero on August 29, 2024 and sell it today you would earn a total of 210.00 from holding Bank Mandiri Persero or generate 14.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Ecopetrol SA ADR
Performance |
| Timeline |
| Bank Mandiri Persero |
| Ecopetrol SA ADR |
Bank Mandiri and Ecopetrol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Ecopetrol
The main advantage of trading using opposite Bank Mandiri and Ecopetrol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Ecopetrol 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 Ecopetrol will offset losses from the drop in Ecopetrol's long position.| Bank Mandiri vs. Israel Discount Bank | Bank Mandiri vs. Baraboo Bancorporation | Bank Mandiri vs. Danske Bank AS | Bank Mandiri vs. Jyske Bank AS |
| Ecopetrol vs. Petroleo Brasileiro Petrobras | Ecopetrol vs. Equinor ASA ADR | Ecopetrol vs. Eni SpA ADR | Ecopetrol vs. Cenovus Energy |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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