Correlation Between Bank Mandiri and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Nel ASA 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 Nel ASA 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 Nel ASA, you can compare the effects of market volatilities on Bank Mandiri and Nel ASA 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 Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Nel ASA.
Diversification Opportunities for Bank Mandiri and Nel ASA
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Nel is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA 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 Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Nel ASA go up and down completely randomly.
Pair Corralation between Bank Mandiri and Nel ASA
Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.38 times more return on investment than Nel ASA. However, Bank Mandiri Persero is 2.65 times less risky than Nel ASA. It trades about 0.04 of its potential returns per unit of risk. Nel ASA is currently generating about -0.05 per unit of risk. If you would invest 1,201 in Bank Mandiri Persero on September 3, 2024 and sell it today you would earn a total of 363.00 from holding Bank Mandiri Persero or generate 30.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Nel ASA
Performance |
| Timeline |
| Bank Mandiri Persero |
| Nel ASA |
Bank Mandiri and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Nel ASA
The main advantage of trading using opposite Bank Mandiri and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA'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 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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