Correlation Between Bank of Hawaii and Bank Mandiri

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

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

Diversification Opportunities for Bank of Hawaii and Bank Mandiri

-0.9

Correlation Coefficient

Bank of Hawaii  Bank Mandiri

Pay attention - limited upside

The 3 months correlation between Bank and Bank is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Hawaii 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 Bank of Hawaii 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 of Hawaii 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 Bank of Hawaii i.e., Bank of Hawaii and Bank Mandiri go up and down completely randomly.

Pair Corralation between Bank of Hawaii and Bank Mandiri

Considering the 90-day investment horizon Bank of Hawaii is expected to generate 1.05 times more return on investment than Bank Mandiri. However, Bank of Hawaii is 1.05 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 0.02 per unit of risk. If you would invest  6,223  in Bank of Hawaii on September 4, 2024 and sell it today you would earn a total of  1,604  from holding Bank of Hawaii or generate 25.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Bank of Hawaii  vs.  Bank Mandiri Persero

Bank of Hawaii

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Hawaii are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Bank of Hawaii demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Bank Mandiri Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Mandiri Persero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bank of Hawaii and Bank Mandiri

The main advantage of trading using opposite Bank of Hawaii and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Hawaii 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 Bank of Hawaii 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.