Correlation Between Bank Mandiri and Spring Valley

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

Diversification Opportunities for Bank Mandiri and Spring Valley

-0.13

Correlation Coefficient

Bank Mandiri  Spring Valley

Good diversification

The 3 months correlation between Bank and Spring is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Spring Valley go up and down completely randomly.

Pair Corralation between Bank Mandiri and Spring Valley

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 17.91 times more return on investment than Spring Valley. However, Bank Mandiri is 17.91 times more volatile than Spring Valley Acquisition. It trades about 0.03 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.07 per unit of risk. If you would invest  35.00  in Bank Mandiri Persero on September 12, 2024 and sell it today you would earn a total of  5.00  from holding Bank Mandiri Persero or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.93%
Values	Daily Returns

Bank Mandiri Persero  vs.  Spring Valley Acquisition

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.

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bank Mandiri and Spring Valley

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

The idea behind Bank Mandiri Persero and Spring Valley Acquisition 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.