Correlation Between Bank Mandiri and BioCardia

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

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

Diversification Opportunities for Bank Mandiri and BioCardia

0.67

Correlation Coefficient

Bank Mandiri  BioCardia

Poor diversification

The 3 months correlation between Bank and BioCardia is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and BioCardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BioCardia and Bank Mandiri 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 Mandiri Persero are associated (or correlated) with BioCardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BioCardia has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and BioCardia go up and down completely randomly.

Pair Corralation between Bank Mandiri and BioCardia

If you would invest (100.00) in BioCardia on September 3, 2024 and sell it today you would earn a total of  100.00  from holding BioCardia or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.0%
Values	Daily Returns

Bank Mandiri Persero  vs.  BioCardia

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.

BioCardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BioCardia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, BioCardia is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bank Mandiri and BioCardia

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

The idea behind Bank Mandiri Persero and BioCardia 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.