Correlation Between Bank Mandiri and Embassy Bancorp
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Embassy Bancorp 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 Embassy Bancorp 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 Embassy Bancorp, you can compare the effects of market volatilities on Bank Mandiri and Embassy Bancorp 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 Embassy Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Embassy Bancorp.
Diversification Opportunities for Bank Mandiri and Embassy Bancorp
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Embassy is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Embassy Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embassy Bancorp 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 Embassy Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embassy Bancorp has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Embassy Bancorp go up and down completely randomly.
Pair Corralation between Bank Mandiri and Embassy Bancorp
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.57 times more return on investment than Embassy Bancorp. However, Bank Mandiri Persero is 1.74 times less risky than Embassy Bancorp. It trades about 0.04 of its potential returns per unit of risk. Embassy Bancorp is currently generating about 0.01 per unit of risk. If you would invest 1,201 in Bank Mandiri Persero on September 3, 2024 and sell it today you would earn a total of 363.00 from holding Bank Mandiri Persero or generate 30.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Embassy Bancorp
Performance |
| Timeline |
| Bank Mandiri Persero |
| Embassy Bancorp |
Bank Mandiri and Embassy Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Embassy Bancorp
The main advantage of trading using opposite Bank Mandiri and Embassy Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Embassy Bancorp 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 Embassy Bancorp will offset losses from the drop in Embassy Bancorp'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 |
| Embassy Bancorp vs. Pioneer Bankcorp | Embassy Bancorp vs. Liberty Northwest Bancorp | Embassy Bancorp vs. First Community | Embassy Bancorp vs. Coeur dAlene Bancorp |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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