Correlation Between BANK MANDIRI and KGHM Polska
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and KGHM Polska 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 KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and KGHM Polska Miedz, you can compare the effects of market volatilities on BANK MANDIRI and KGHM Polska 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 KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and KGHM Polska.
Diversification Opportunities for BANK MANDIRI and KGHM Polska
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BANK and KGHM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz 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 KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and KGHM Polska go up and down completely randomly.
Pair Corralation between BANK MANDIRI and KGHM Polska
Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.62 times less return on investment than KGHM Polska. But when comparing it to its historical volatility, BANK MANDIRI is 1.24 times less risky than KGHM Polska. It trades about 0.03 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,338 in KGHM Polska Miedz on September 13, 2024 and sell it today you would earn a total of 693.00 from holding KGHM Polska Miedz or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK MANDIRI vs. KGHM Polska Miedz
Performance |
| Timeline |
| BANK MANDIRI |
| KGHM Polska Miedz |
BANK MANDIRI and KGHM Polska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and KGHM Polska
The main advantage of trading using opposite BANK MANDIRI and KGHM Polska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, KGHM Polska 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 KGHM Polska will offset losses from the drop in KGHM Polska's long position.| BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc |
| KGHM Polska vs. Southern Copper | KGHM Polska vs. Sandfire Resources Limited | KGHM Polska vs. Superior Plus Corp | KGHM Polska vs. NMI Holdings |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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