Correlation Between PT Bank and MKS Instruments

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Can any of the company-specific risk be diversified away by investing in both PT Bank and MKS Instruments 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 MKS Instruments 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 MKS Instruments, you can compare the effects of market volatilities on PT Bank and MKS Instruments 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 MKS Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and MKS Instruments.

Diversification Opportunities for PT Bank and MKS Instruments

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PQ9 and MKS is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of PT Bank i.e., PT Bank and MKS Instruments go up and down completely randomly.

Pair Corralation between PT Bank and MKS Instruments

Assuming the 90 days horizon PT Bank Mandiri is expected to generate 2.28 times more return on investment than MKS Instruments. However, PT Bank is 2.28 times more volatile than MKS Instruments. It trades about 0.03 of its potential returns per unit of risk. MKS Instruments is currently generating about -0.06 per unit of risk. If you would invest  36.00  in PT Bank Mandiri on September 12, 2024 and sell it today you would earn a total of  0.00  from holding PT Bank Mandiri or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

PT Bank Mandiri  vs.  MKS Instruments

 Performance 
       Timeline  
PT Bank Mandiri 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
MKS Instruments 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in MKS Instruments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MKS Instruments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Bank and MKS Instruments Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and MKS Instruments

The main advantage of trading using opposite PT Bank and MKS Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, MKS Instruments 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 MKS Instruments will offset losses from the drop in MKS Instruments' long position.
The idea behind PT Bank Mandiri and MKS Instruments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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