Correlation Between BANK MANDIRI and ABB
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and ABB 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 ABB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and ABB, you can compare the effects of market volatilities on BANK MANDIRI and ABB 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 ABB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and ABB.
Diversification Opportunities for BANK MANDIRI and ABB
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BANK and ABB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and ABB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABB 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 are associated (or correlated) with ABB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABB has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and ABB go up and down completely randomly.
Pair Corralation between BANK MANDIRI and ABB
Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the ABB. In addition to that, BANK MANDIRI is 1.25 times more volatile than ABB. It trades about -0.02 of its total potential returns per unit of risk. ABB is currently generating about 0.05 per unit of volatility. If you would invest 5,200 in ABB on August 30, 2024 and sell it today you would earn a total of 100.00 from holding ABB or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. ABB
Performance |
| Timeline |
| BANK MANDIRI |
| ABB |
BANK MANDIRI and ABB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and ABB
The main advantage of trading using opposite BANK MANDIRI and ABB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, ABB 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 ABB will offset losses from the drop in ABB's long position.| BANK MANDIRI vs. REINET INVESTMENTS SCA | BANK MANDIRI vs. Perdoceo Education | BANK MANDIRI vs. SEI INVESTMENTS | BANK MANDIRI vs. DEVRY EDUCATION GRP |
| ABB vs. Wizz Air Holdings | ABB vs. Altair Engineering | ABB vs. Enter Air SA | ABB vs. Tianjin Capital Environmental |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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