Correlation Between China Minsh and Bank Mandiri

Can any of the company-specific risk be diversified away by investing in both China Minsh 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 China Minsh and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Minsh and Bank Mandiri Persero, you can compare the effects of market volatilities on China Minsh 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 China Minsh with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Minsh and Bank Mandiri.

Diversification Opportunities for China Minsh and Bank Mandiri

0.08

Correlation Coefficient

China Minsh  Bank Mandiri

Significant diversification

The 3 months correlation between China and Bank is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding China Minsh 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 China Minsh 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 China Minsh 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 China Minsh i.e., China Minsh and Bank Mandiri go up and down completely randomly.

Pair Corralation between China Minsh and Bank Mandiri

Assuming the 90 days horizon China Minsh is expected to generate 2.3 times more return on investment than Bank Mandiri. However, China Minsh is 2.3 times more volatile than Bank Mandiri Persero. It trades about 0.06 of its potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.11 per unit of risk. If you would invest  358.00  in China Minsh on July 21, 2024 and sell it today you would earn a total of  36.00  from holding China Minsh or generate 10.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Minsh  vs.  Bank Mandiri Persero

China Minsh

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Minsh are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward-looking signals, China Minsh showed solid returns over the last few months and may actually be approaching a breakup point.

Bank Mandiri Persero

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Mandiri Persero are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bank Mandiri showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Minsh and Bank Mandiri

The main advantage of trading using opposite China Minsh and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Minsh 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 China Minsh 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.