Correlation Between Mandom Indonesia and City Retail
Can any of the company-specific risk be diversified away by investing in both Mandom Indonesia and City Retail 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 Mandom Indonesia and City Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mandom Indonesia Tbk and City Retail Developments, you can compare the effects of market volatilities on Mandom Indonesia and City Retail 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 Mandom Indonesia with a short position of City Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mandom Indonesia and City Retail.
Diversification Opportunities for Mandom Indonesia and City Retail
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mandom and City is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mandom Indonesia Tbk and City Retail Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Retail Developments and Mandom Indonesia 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 Mandom Indonesia Tbk are associated (or correlated) with City Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Retail Developments has no effect on the direction of Mandom Indonesia i.e., Mandom Indonesia and City Retail go up and down completely randomly.
Pair Corralation between Mandom Indonesia and City Retail
Assuming the 90 days trading horizon Mandom Indonesia Tbk is expected to under-perform the City Retail. In addition to that, Mandom Indonesia is 2.98 times more volatile than City Retail Developments. It trades about -0.01 of its total potential returns per unit of risk. City Retail Developments is currently generating about -0.02 per unit of volatility. If you would invest 14,700 in City Retail Developments on September 2, 2024 and sell it today you would lose (1,200) from holding City Retail Developments or give up 8.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mandom Indonesia Tbk vs. City Retail Developments
Performance |
| Timeline |
| Mandom Indonesia Tbk |
| City Retail Developments |
Mandom Indonesia and City Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mandom Indonesia and City Retail
The main advantage of trading using opposite Mandom Indonesia and City Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mandom Indonesia position performs unexpectedly, City Retail 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 City Retail will offset losses from the drop in City Retail's long position.| Mandom Indonesia vs. Bank BRISyariah Tbk | Mandom Indonesia vs. Mitra Pinasthika Mustika | Mandom Indonesia vs. Jakarta Int Hotels | Mandom Indonesia vs. Indosterling Technomedia Tbk |
| City Retail vs. Lippo Cikarang Tbk | City Retail vs. Lippo Karawaci Tbk | City Retail vs. Mitra Pinasthika Mustika | City Retail vs. Jakarta Int Hotels |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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