Correlation Between BANK MANDIRI and Chongqing Machinery
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Chongqing Machinery 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 Chongqing Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and Chongqing Machinery Electric, you can compare the effects of market volatilities on BANK MANDIRI and Chongqing Machinery 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 Chongqing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Chongqing Machinery.
Diversification Opportunities for BANK MANDIRI and Chongqing Machinery
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and Chongqing is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Chongqing Machinery Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Machinery 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 Chongqing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Machinery has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Chongqing Machinery go up and down completely randomly.
Pair Corralation between BANK MANDIRI and Chongqing Machinery
Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Chongqing Machinery. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 2.02 times less risky than Chongqing Machinery. The stock trades about -0.09 of its potential returns per unit of risk. The Chongqing Machinery Electric is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7.60 in Chongqing Machinery Electric on October 20, 2024 and sell it today you would earn a total of 0.80 from holding Chongqing Machinery Electric or generate 10.53% 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. Chongqing Machinery Electric
Performance |
| Timeline |
| BANK MANDIRI |
| Chongqing Machinery |
BANK MANDIRI and Chongqing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and Chongqing Machinery
The main advantage of trading using opposite BANK MANDIRI and Chongqing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, Chongqing Machinery 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 Chongqing Machinery will offset losses from the drop in Chongqing Machinery's long position.| BANK MANDIRI vs. Motorcar Parts of | BANK MANDIRI vs. ScanSource | BANK MANDIRI vs. INTER CARS SA | BANK MANDIRI vs. Chesapeake Utilities |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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