Correlation Between Bank Cimb and Bank Mayapada

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

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

Diversification Opportunities for Bank Cimb and Bank Mayapada

0.24

Correlation Coefficient

Bank Cimb  Bank Mayapada

Modest diversification

The 3 months correlation between Bank and Bank is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bank Cimb Niaga and Bank Mayapada Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mayapada Intern and Bank Cimb 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 Cimb Niaga are associated (or correlated) with Bank Mayapada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mayapada Intern has no effect on the direction of Bank Cimb i.e., Bank Cimb and Bank Mayapada go up and down completely randomly.

Pair Corralation between Bank Cimb and Bank Mayapada

Assuming the 90 days trading horizon Bank Cimb Niaga is expected to under-perform the Bank Mayapada. But the stock apears to be less risky and, when comparing its historical volatility, Bank Cimb Niaga is 4.7 times less risky than Bank Mayapada. The stock trades about -0.11 of its potential returns per unit of risk. The Bank Mayapada Internasional is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  23,400  in Bank Mayapada Internasional on September 14, 2024 and sell it today you would earn a total of  200.00  from holding Bank Mayapada Internasional or generate 0.85% return on investment over 90 days.

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

Bank Cimb Niaga  vs.  Bank Mayapada Internasional

Bank Cimb Niaga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Cimb Niaga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bank Mayapada Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Mayapada Internasional are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Mayapada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bank Cimb and Bank Mayapada

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

The idea behind Bank Cimb Niaga and Bank Mayapada Internasional 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.