Correlation Between Bank Mandiri and New HopeLtd
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and New HopeLtd 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 New HopeLtd 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 New Hope, you can compare the effects of market volatilities on Bank Mandiri and New HopeLtd 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 New HopeLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and New HopeLtd.
Diversification Opportunities for Bank Mandiri and New HopeLtd
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and New is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New HopeLtd 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 New HopeLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New HopeLtd has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and New HopeLtd go up and down completely randomly.
Pair Corralation between Bank Mandiri and New HopeLtd
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the New HopeLtd. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.03 times less risky than New HopeLtd. The pink sheet trades about -0.16 of its potential returns per unit of risk. The New Hope is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 321.00 in New Hope on August 31, 2024 and sell it today you would lose (9.00) from holding New Hope or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. New Hope
Performance |
| Timeline |
| Bank Mandiri Persero |
| New HopeLtd |
Bank Mandiri and New HopeLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and New HopeLtd
The main advantage of trading using opposite Bank Mandiri and New HopeLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, New HopeLtd 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 New HopeLtd will offset losses from the drop in New HopeLtd'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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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