Correlation Between Bank Maspion and Bank Mestika

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

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

Diversification Opportunities for Bank Maspion and Bank Mestika

-0.3

Correlation Coefficient

Bank Maspion  Bank Mestika

Very good diversification

The 3 months correlation between Bank and Bank is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank Maspion Indonesia and Bank Mestika Dharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mestika Dharma and Bank Maspion 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 Maspion Indonesia are associated (or correlated) with Bank Mestika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mestika Dharma has no effect on the direction of Bank Maspion i.e., Bank Maspion and Bank Mestika go up and down completely randomly.

Pair Corralation between Bank Maspion and Bank Mestika

Assuming the 90 days trading horizon Bank Maspion Indonesia is expected to under-perform the Bank Mestika. In addition to that, Bank Maspion is 1.4 times more volatile than Bank Mestika Dharma. It trades about -0.22 of its total potential returns per unit of risk. Bank Mestika Dharma is currently generating about -0.03 per unit of volatility. If you would invest  205,000  in Bank Mestika Dharma on September 18, 2024 and sell it today you would lose (11,000) from holding Bank Mestika Dharma or give up 5.37% of portfolio value over 90 days.

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

Bank Maspion Indonesia  vs.  Bank Mestika Dharma

Bank Maspion Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Maspion Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bank Mestika Dharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Mestika Dharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Mestika is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank Maspion and Bank Mestika

The main advantage of trading using opposite Bank Maspion and Bank Mestika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Maspion position performs unexpectedly, Bank Mestika 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 Mestika will offset losses from the drop in Bank Mestika's long position.

The idea behind Bank Maspion Indonesia and Bank Mestika Dharma 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.