Correlation Between Bank Mandiri and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Telenor 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 Telenor 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 Telenor ASA ADR, you can compare the effects of market volatilities on Bank Mandiri and Telenor 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Telenor ASA.
Diversification Opportunities for Bank Mandiri and Telenor ASA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Telenor is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Telenor ASA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA ADR 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA ADR has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Telenor ASA go up and down completely randomly.
Pair Corralation between Bank Mandiri and Telenor ASA
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Telenor ASA. In addition to that, Bank Mandiri is 3.55 times more volatile than Telenor ASA ADR. It trades about -0.31 of its total potential returns per unit of risk. Telenor ASA ADR is currently generating about 0.38 per unit of volatility. If you would invest 1,201 in Telenor ASA ADR on November 27, 2024 and sell it today you would earn a total of 79.00 from holding Telenor ASA ADR or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mandiri Persero vs. Telenor ASA ADR
Performance |
| Timeline |
| Bank Mandiri Persero |
| Telenor ASA ADR |
Bank Mandiri and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mandiri and Telenor ASA
The main advantage of trading using opposite Bank Mandiri and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, Telenor 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 Telenor ASA will offset losses from the drop in Telenor 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 |
| Telenor ASA vs. PCCW Limited | Telenor ASA vs. Hellenic Telecommunications Org | Telenor ASA vs. Telefonica SA ADR | Telenor ASA vs. XL Axiata 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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