Correlation Between Bank Mandiri and OWC Pharmaceutical

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

Diversification Opportunities for Bank Mandiri and OWC Pharmaceutical

-0.31

Correlation Coefficient

Bank Mandiri  OWC Pharmaceutical

Very good diversification

The 3 months correlation between Bank and OWC is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and OWC Pharmaceutical Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OWC Pharmaceutical 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 OWC Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OWC Pharmaceutical has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and OWC Pharmaceutical go up and down completely randomly.

Pair Corralation between Bank Mandiri and OWC Pharmaceutical

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the OWC Pharmaceutical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 78.68 times less risky than OWC Pharmaceutical. The pink sheet trades about -0.04 of its potential returns per unit of risk. The OWC Pharmaceutical Research is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  0.01  in OWC Pharmaceutical Research on September 15, 2024 and sell it today you would earn a total of  0.00  from holding OWC Pharmaceutical Research or generate 0.0% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  OWC Pharmaceutical Research

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

OWC Pharmaceutical

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OWC Pharmaceutical Research are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, OWC Pharmaceutical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and OWC Pharmaceutical

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

The idea behind Bank Mandiri Persero and OWC Pharmaceutical Research 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.