Correlation Between BANK MANDIRI and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and BANK RAKYAT 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 BANK RAKYAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and BANK RAKYAT IND, you can compare the effects of market volatilities on BANK MANDIRI and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and BANK RAKYAT.
Diversification Opportunities for BANK MANDIRI and BANK RAKYAT
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between BANK and BANK is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and BANK RAKYAT go up and down completely randomly.
Pair Corralation between BANK MANDIRI and BANK RAKYAT
Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the BANK RAKYAT. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.07 times less risky than BANK RAKYAT. The stock trades about -0.3 of its potential returns per unit of risk. The BANK RAKYAT IND is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 28.00 in BANK RAKYAT IND on August 29, 2024 and sell it today you would lose (2.00) from holding BANK RAKYAT IND or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. BANK RAKYAT IND
Performance |
| Timeline |
| BANK MANDIRI |
| BANK RAKYAT IND |
BANK MANDIRI and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and BANK RAKYAT
The main advantage of trading using opposite BANK MANDIRI and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Superior Plus Corp | BANK MANDIRI vs. SIVERS SEMICONDUCTORS AB |
| BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Apple Inc | BANK RAKYAT vs. Superior Plus Corp | BANK RAKYAT vs. SIVERS SEMICONDUCTORS AB |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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