Correlation Between PT Bank and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both PT Bank and MidCap Financial 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 PT Bank and MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Mandiri and MidCap Financial Investment, you can compare the effects of market volatilities on PT Bank and MidCap Financial 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 PT Bank with a short position of MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and MidCap Financial.
Diversification Opportunities for PT Bank and MidCap Financial
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PQ9 and MidCap is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and MidCap Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidCap Financial Inv and PT Bank 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 PT Bank Mandiri are associated (or correlated) with MidCap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidCap Financial Inv has no effect on the direction of PT Bank i.e., PT Bank and MidCap Financial go up and down completely randomly.
Pair Corralation between PT Bank and MidCap Financial
Assuming the 90 days horizon PT Bank Mandiri is expected to generate 4.32 times more return on investment than MidCap Financial. However, PT Bank is 4.32 times more volatile than MidCap Financial Investment. It trades about 0.05 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about 0.11 per unit of risk. If you would invest 34.00 in PT Bank Mandiri on November 3, 2024 and sell it today you would earn a total of 1.00 from holding PT Bank Mandiri or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Mandiri vs. MidCap Financial Investment
Performance |
| Timeline |
| PT Bank Mandiri |
| MidCap Financial Inv |
PT Bank and MidCap Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and MidCap Financial
The main advantage of trading using opposite PT Bank and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, MidCap Financial 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 MidCap Financial will offset losses from the drop in MidCap Financial's long position.| PT Bank vs. Texas Roadhouse | PT Bank vs. Nishi Nippon Railroad Co | PT Bank vs. Motorcar Parts of | PT Bank vs. EVS Broadcast Equipment |
| MidCap Financial vs. SIVERS SEMICONDUCTORS AB | MidCap Financial vs. NorAm Drilling AS | MidCap Financial vs. Volkswagen AG | MidCap Financial vs. Darden Restaurants |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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