Correlation Between Bank Mandiri and Federal Home
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Federal Home 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 Federal Home 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 Federal Home 530, you can compare the effects of market volatilities on Bank Mandiri and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Federal Home.
Diversification Opportunities for Bank Mandiri and Federal Home
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Federal is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Federal Home 530 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home 530 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home 530 has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Federal Home go up and down completely randomly.
Pair Corralation between Bank Mandiri and Federal Home
Assuming the 90 days horizon Bank Mandiri is expected to generate 12.8 times less return on investment than Federal Home. But when comparing it to its historical volatility, Bank Mandiri Persero is 4.21 times less risky than Federal Home. It trades about 0.04 of its potential returns per unit of risk. Federal Home 530 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Federal Home 530 on September 3, 2024 and sell it today you would earn a total of 861.00 from holding Federal Home 530 or generate 123.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Federal Home 530
Performance |
| Timeline |
| Bank Mandiri Persero |
| Federal Home 530 |
Bank Mandiri and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Federal Home
The main advantage of trading using opposite Bank Mandiri and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home'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 |
| Federal Home vs. Federal Home Loan | Federal Home vs. Deckers Outdoor | Federal Home vs. TechnipFMC PLC | Federal Home vs. Singular Genomics Systems |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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