Correlation Between Bank Mandiri and Indofood Sukses
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Indofood Sukses 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 Indofood Sukses 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 Indofood Sukses Makmur, you can compare the effects of market volatilities on Bank Mandiri and Indofood Sukses 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 Indofood Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Indofood Sukses.
Diversification Opportunities for Bank Mandiri and Indofood Sukses
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Indofood is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Indofood Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood Sukses Makmur 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 Indofood Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood Sukses Makmur has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Indofood Sukses go up and down completely randomly.
Pair Corralation between Bank Mandiri and Indofood Sukses
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Indofood Sukses. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 1.93 times less risky than Indofood Sukses. The pink sheet trades about -0.36 of its potential returns per unit of risk. The Indofood Sukses Makmur is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,318 in Indofood Sukses Makmur on August 25, 2024 and sell it today you would lose (18.00) from holding Indofood Sukses Makmur or give up 0.78% 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. Indofood Sukses Makmur
Performance |
| Timeline |
| Bank Mandiri Persero |
| Indofood Sukses Makmur |
Bank Mandiri and Indofood Sukses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Indofood Sukses
The main advantage of trading using opposite Bank Mandiri and Indofood Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Indofood Sukses 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 Indofood Sukses will offset losses from the drop in Indofood Sukses' long position.| Bank Mandiri vs. Standard Bank Group | Bank Mandiri vs. PSB Holdings | Bank Mandiri vs. United Overseas Bank | Bank Mandiri vs. Turkiye Garanti Bankasi |
| Indofood Sukses vs. Toyo Suisan Kaisha | Indofood Sukses vs. Bank Mandiri Persero | Indofood Sukses vs. Astra International Tbk | Indofood Sukses vs. United Tractors Tbk |
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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