Correlation Between BANK MANDIRI and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Telkom Indonesia 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 Telkom Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and Telkom Indonesia Tbk, you can compare the effects of market volatilities on BANK MANDIRI and Telkom Indonesia 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 Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Telkom Indonesia.
Diversification Opportunities for BANK MANDIRI and Telkom Indonesia
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and Telkom is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia Tbk 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 Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Telkom Indonesia go up and down completely randomly.
Pair Corralation between BANK MANDIRI and Telkom Indonesia
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 0.42 times more return on investment than Telkom Indonesia. However, BANK MANDIRI is 2.4 times less risky than Telkom Indonesia. It trades about -0.21 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.09 per unit of risk. If you would invest 39.00 in BANK MANDIRI on August 24, 2024 and sell it today you would lose (5.00) from holding BANK MANDIRI or give up 12.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. Telkom Indonesia Tbk
Performance |
| Timeline |
| BANK MANDIRI |
| Telkom Indonesia Tbk |
BANK MANDIRI and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and Telkom Indonesia
The main advantage of trading using opposite BANK MANDIRI and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's long position.| BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc |
| Telkom Indonesia vs. Apple Inc | Telkom Indonesia vs. Apple Inc | Telkom Indonesia vs. Apple Inc | Telkom Indonesia vs. Apple Inc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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