Correlation Between Bank Mandiri and Intact Financial

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

Diversification Opportunities for Bank Mandiri and Intact Financial

-0.37

Correlation Coefficient

Bank Mandiri  Intact Financial

Very good diversification

The 3 months correlation between Bank and Intact is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Intact Financial go up and down completely randomly.

Pair Corralation between Bank Mandiri and Intact Financial

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 9.8 times more return on investment than Intact Financial. However, Bank Mandiri is 9.8 times more volatile than Intact Financial. It trades about 0.06 of its potential returns per unit of risk. Intact Financial is currently generating about 0.05 per unit of risk. If you would invest  29.00  in Bank Mandiri Persero on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Bank Mandiri Persero or generate 31.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Bank Mandiri Persero  vs.  Intact Financial

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 fragile 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.

Intact Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intact Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Intact Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Mandiri and Intact Financial

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

The idea behind Bank Mandiri Persero and Intact Financial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.