Correlation Between Community Bankers and Bank Mandiri

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Can any of the company-specific risk be diversified away by investing in both Community Bankers 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 Community Bankers and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Bankers and Bank Mandiri Persero, you can compare the effects of market volatilities on Community Bankers 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 Community Bankers with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bankers and Bank Mandiri.

Diversification Opportunities for Community Bankers and Bank Mandiri

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Community and Bank is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers 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 Community Bankers 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 Community Bankers 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 Community Bankers i.e., Community Bankers and Bank Mandiri go up and down completely randomly.

Pair Corralation between Community Bankers and Bank Mandiri

Given the investment horizon of 90 days Community Bankers is expected to generate 0.4 times more return on investment than Bank Mandiri. However, Community Bankers is 2.48 times less risky than Bank Mandiri. It trades about 0.11 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  443.00  in Community Bankers on September 2, 2024 and sell it today you would earn a total of  47.00  from holding Community Bankers or generate 10.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Community Bankers  vs.  Bank Mandiri Persero

 Performance 
       Timeline  
Community Bankers 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Community Bankers are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Community Bankers may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Bank Mandiri Persero 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank Mandiri Persero has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bank Mandiri is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Community Bankers and Bank Mandiri Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Community Bankers and Bank Mandiri

The main advantage of trading using opposite Community Bankers and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bankers 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 Community Bankers 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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