Correlation Between Bank Mandiri and Cibl

Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and Cibl 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 Cibl 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 Cibl Inc, you can compare the effects of market volatilities on Bank Mandiri and Cibl 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 Cibl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Cibl.

Diversification Opportunities for Bank Mandiri and Cibl

-0.63

Correlation Coefficient

Bank Mandiri  Cibl

Excellent diversification

The 3 months correlation between Bank and Cibl is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Cibl Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cibl Inc 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 Cibl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cibl Inc has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Cibl go up and down completely randomly.

Pair Corralation between Bank Mandiri and Cibl

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Cibl. In addition to that, Bank Mandiri is 2.0 times more volatile than Cibl Inc. It trades about -0.08 of its total potential returns per unit of risk. Cibl Inc is currently generating about 0.0 per unit of volatility. If you would invest  180,000  in Cibl Inc on September 5, 2024 and sell it today you would lose (2,500) from holding Cibl Inc or give up 1.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Bank Mandiri Persero  vs.  Cibl Inc

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cibl Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cibl Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Cibl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Mandiri and Cibl

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

The idea behind Bank Mandiri Persero and Cibl Inc 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.