Correlation Between Bank Mandiri and MCF Energy
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and MCF Energy 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 MCF Energy 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 MCF Energy, you can compare the effects of market volatilities on Bank Mandiri and MCF Energy 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 MCF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and MCF Energy.
Diversification Opportunities for Bank Mandiri and MCF Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and MCF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and MCF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCF Energy 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 MCF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCF Energy has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and MCF Energy go up and down completely randomly.
Pair Corralation between Bank Mandiri and MCF Energy
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.31 times more return on investment than MCF Energy. However, Bank Mandiri Persero is 3.2 times less risky than MCF Energy. It trades about 0.02 of its potential returns per unit of risk. MCF Energy is currently generating about -0.04 per unit of risk. If you would invest 1,479 in Bank Mandiri Persero on September 4, 2024 and sell it today you would earn a total of 85.00 from holding Bank Mandiri Persero or generate 5.75% 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. MCF Energy
Performance |
| Timeline |
| Bank Mandiri Persero |
| MCF Energy |
Bank Mandiri and MCF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and MCF Energy
The main advantage of trading using opposite Bank Mandiri and MCF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, MCF Energy 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 MCF Energy will offset losses from the drop in MCF Energy'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 |
| MCF Energy vs. Compania Cervecerias Unidas | MCF Energy vs. Diageo PLC ADR | MCF Energy vs. Insteel Industries | MCF Energy vs. BRC Inc |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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