Correlation Between Snowflake and Bank Mandiri
Can any of the company-specific risk be diversified away by investing in both Snowflake and Bank Mandiri 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 Snowflake and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snowflake and Bank Mandiri Persero, you can compare the effects of market volatilities on Snowflake and Bank Mandiri 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 Snowflake with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snowflake and Bank Mandiri.
Diversification Opportunities for Snowflake and Bank Mandiri
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Snowflake and Bank is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero and Snowflake 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 Snowflake are associated (or correlated) with Bank Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mandiri Persero has no effect on the direction of Snowflake i.e., Snowflake and Bank Mandiri go up and down completely randomly.
Pair Corralation between Snowflake and Bank Mandiri
Given the investment horizon of 90 days Snowflake is expected to generate 1.75 times more return on investment than Bank Mandiri. However, Snowflake is 1.75 times more volatile than Bank Mandiri Persero. It trades about 0.0 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about -0.03 per unit of risk. If you would invest 18,828 in Snowflake on August 27, 2024 and sell it today you would lose (2,084) from holding Snowflake or give up 11.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Snowflake vs. Bank Mandiri Persero
Performance |
| Timeline |
| Snowflake |
| Bank Mandiri Persero |
Snowflake and Bank Mandiri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Snowflake and Bank Mandiri
The main advantage of trading using opposite Snowflake and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snowflake position performs unexpectedly, Bank Mandiri 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 Mandiri will offset losses from the drop in Bank Mandiri's long position.The idea behind Snowflake and Bank Mandiri Persero 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.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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