Correlation Between Bank Mandiri and National Bank
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and National 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 National 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 National Bank Holdings, you can compare the effects of market volatilities on Bank Mandiri and National 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and National Bank.
Diversification Opportunities for Bank Mandiri and National Bank
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and National is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and National Bank go up and down completely randomly.
Pair Corralation between Bank Mandiri and National Bank
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the National Bank. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.82 times less risky than National Bank. The pink sheet trades about -0.28 of its potential returns per unit of risk. The National Bank Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,550 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 389.00 from holding National Bank Holdings or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank Mandiri Persero vs. National Bank Holdings
Performance |
| Timeline |
| Bank Mandiri Persero |
| National Bank Holdings |
Bank Mandiri and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and National Bank
The main advantage of trading using opposite Bank Mandiri and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, National 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 National Bank will offset losses from the drop in National Bank's long position.The idea behind Bank Mandiri Persero and National Bank Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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