Correlation Between BANK MANDIRI and NexGen Energy
Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and NexGen Energy 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 NexGen Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK MANDIRI and NexGen Energy, you can compare the effects of market volatilities on BANK MANDIRI and NexGen Energy 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 NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and NexGen Energy.
Diversification Opportunities for BANK MANDIRI and NexGen Energy
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BANK and NexGen is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy 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 NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and NexGen Energy go up and down completely randomly.
Pair Corralation between BANK MANDIRI and NexGen Energy
Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the NexGen Energy. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.73 times less risky than NexGen Energy. The stock trades about -0.1 of its potential returns per unit of risk. The NexGen Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 526.00 in NexGen Energy on September 12, 2024 and sell it today you would earn a total of 259.00 from holding NexGen Energy or generate 49.24% 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. NexGen Energy
Performance |
| Timeline |
| BANK MANDIRI |
| NexGen Energy |
BANK MANDIRI and NexGen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK MANDIRI and NexGen Energy
The main advantage of trading using opposite BANK MANDIRI and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, NexGen Energy 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 NexGen Energy will offset losses from the drop in NexGen Energy's long position.| BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc | BANK MANDIRI vs. Apple Inc |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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