Correlation Between BANK MANDIRI and BRIT AMER
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and BRIT AMER 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 BRIT AMER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and BRIT AMER TOBACCO, you can compare the effects of market volatilities on BANK MANDIRI and BRIT AMER 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 BRIT AMER. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and BRIT AMER.
Diversification Opportunities for BANK MANDIRI and BRIT AMER
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and BRIT is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and BRIT AMER TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIT AMER TOBACCO 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 BRIT AMER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIT AMER TOBACCO has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and BRIT AMER go up and down completely randomly.
Pair Corralation between BANK MANDIRI and BRIT AMER
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.05 times less return on investment than BRIT AMER. But when comparing it to its historical volatility, BANK MANDIRI is 1.01 times less risky than BRIT AMER. It trades about 0.23 of its potential returns per unit of risk. BRIT AMER TOBACCO is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 3,564 in BRIT AMER TOBACCO on November 1, 2024 and sell it today you would earn a total of 235.00 from holding BRIT AMER TOBACCO or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. BRIT AMER TOBACCO
Performance |
| Timeline |
| BANK MANDIRI |
| BRIT AMER TOBACCO |
BANK MANDIRI and BRIT AMER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and BRIT AMER
The main advantage of trading using opposite BANK MANDIRI and BRIT AMER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, BRIT AMER 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 BRIT AMER will offset losses from the drop in BRIT AMER's long position.| BANK MANDIRI vs. RCS MediaGroup SpA | BANK MANDIRI vs. GigaMedia | BANK MANDIRI vs. MTY Food Group | BANK MANDIRI vs. Universal Entertainment |
| BRIT AMER vs. Summit Materials | BRIT AMER vs. VULCAN MATERIALS | BRIT AMER vs. Hyster Yale Materials Handling | BRIT AMER vs. Compagnie Plastic Omnium |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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