Correlation Between JAPAN POST and Bank Mandiri

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

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

Diversification Opportunities for JAPAN POST and Bank Mandiri

-0.13

Correlation Coefficient

JAPAN POST  Bank Mandiri

Good diversification

The 3 months correlation between JAPAN and Bank is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding JAPAN POST BANK 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 JAPAN POST 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 JAPAN POST BANK 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 JAPAN POST i.e., JAPAN POST and Bank Mandiri go up and down completely randomly.

Pair Corralation between JAPAN POST and Bank Mandiri

Assuming the 90 days horizon JAPAN POST BANK is expected to generate 0.5 times more return on investment than Bank Mandiri. However, JAPAN POST BANK is 2.0 times less risky than Bank Mandiri. It trades about 0.04 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  949.00  in JAPAN POST BANK on August 31, 2024 and sell it today you would earn a total of  32.00  from holding JAPAN POST BANK or generate 3.37% return on investment over 90 days.

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

JAPAN POST BANK  vs.  Bank Mandiri Persero

JAPAN POST BANK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JAPAN POST BANK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, JAPAN POST is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. 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.

Pair Trading with JAPAN POST and Bank Mandiri

The main advantage of trading using opposite JAPAN POST and Bank Mandiri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JAPAN POST 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 JAPAN POST BANK 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.