Correlation Between Bank Mandiri and Farmers Bank
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Farmers Bank 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 Farmers Bank 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 The Farmers Bank, you can compare the effects of market volatilities on Bank Mandiri and Farmers Bank 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 Farmers Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Farmers Bank.
Diversification Opportunities for Bank Mandiri and Farmers Bank
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Farmers is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and The Farmers Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers Bank 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 Farmers Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers Bank has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Farmers Bank go up and down completely randomly.
Pair Corralation between Bank Mandiri and Farmers Bank
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.79 times more return on investment than Farmers Bank. However, Bank Mandiri Persero is 1.26 times less risky than Farmers Bank. It trades about 0.02 of its potential returns per unit of risk. The Farmers Bank is currently generating about 0.0 per unit of risk. If you would invest 1,294 in Bank Mandiri Persero on November 2, 2024 and sell it today you would earn a total of 193.00 from holding Bank Mandiri Persero or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.52% |
| Values | Daily Returns |
Bank Mandiri Persero vs. The Farmers Bank
Performance |
| Timeline |
| Bank Mandiri Persero |
| Farmers Bank |
Bank Mandiri and Farmers Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Farmers Bank
The main advantage of trading using opposite Bank Mandiri and Farmers Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Farmers Bank 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 Farmers Bank will offset losses from the drop in Farmers Bank'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 |
| Farmers Bank vs. CIB Marine Bancshares | Farmers Bank vs. F M Bank | Farmers Bank vs. ENB Financial Corp | Farmers Bank vs. First Bankers Trustshares |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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