Correlation Between Bank Mandiri and CD Projekt

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

Diversification Opportunities for Bank Mandiri and CD Projekt

0.74

Correlation Coefficient

Bank Mandiri  CD Projekt

Poor diversification

The 3 months correlation between Bank and OTGLY is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and CD Projekt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CD Projekt SA 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 CD Projekt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CD Projekt SA has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and CD Projekt go up and down completely randomly.

Pair Corralation between Bank Mandiri and CD Projekt

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the CD Projekt. In addition to that, Bank Mandiri is 2.02 times more volatile than CD Projekt SA. It trades about -0.09 of its total potential returns per unit of risk. CD Projekt SA is currently generating about 0.11 per unit of volatility. If you would invest  986.00  in CD Projekt SA on September 4, 2024 and sell it today you would earn a total of  52.00  from holding CD Projekt SA or generate 5.27% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  CD Projekt SA

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.

CD Projekt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CD Projekt SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bank Mandiri and CD Projekt

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

The idea behind Bank Mandiri Persero and CD Projekt SA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.