Correlation Between BANK MANDIRI and Deutsche Brse

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Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Deutsche Brse 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 Deutsche Brse into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and Deutsche Brse AG, you can compare the effects of market volatilities on BANK MANDIRI and Deutsche Brse 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 Deutsche Brse. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Deutsche Brse.

Diversification Opportunities for BANK MANDIRI and Deutsche Brse

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between BANK and Deutsche is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Deutsche Brse AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Brse AG 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 Deutsche Brse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Brse AG has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Deutsche Brse go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Deutsche Brse

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Deutsche Brse. In addition to that, BANK MANDIRI is 2.93 times more volatile than Deutsche Brse AG. It trades about -0.16 of its total potential returns per unit of risk. Deutsche Brse AG is currently generating about 0.25 per unit of volatility. If you would invest  20,960  in Deutsche Brse AG on September 13, 2024 and sell it today you would earn a total of  1,110  from holding Deutsche Brse AG or generate 5.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BANK MANDIRI  vs.  Deutsche Brse AG

 Performance 
       Timeline  
BANK MANDIRI 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Deutsche Brse AG 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Deutsche Brse AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Deutsche Brse is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BANK MANDIRI and Deutsche Brse Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BANK MANDIRI and Deutsche Brse

The main advantage of trading using opposite BANK MANDIRI and Deutsche Brse positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, Deutsche Brse 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 Deutsche Brse will offset losses from the drop in Deutsche Brse's long position.
The idea behind BANK MANDIRI and Deutsche Brse AG 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.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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