Correlation Between Bank Mandiri and Tecsys

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

Diversification Opportunities for Bank Mandiri and Tecsys

-0.89

Correlation Coefficient

Bank Mandiri  Tecsys

Pay attention - limited upside

The 3 months correlation between Bank and Tecsys is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Tecsys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tecsys 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 Tecsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tecsys Inc has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Tecsys go up and down completely randomly.

Pair Corralation between Bank Mandiri and Tecsys

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Tecsys. In addition to that, Bank Mandiri is 3.64 times more volatile than Tecsys Inc. It trades about -0.08 of its total potential returns per unit of risk. Tecsys Inc is currently generating about 0.2 per unit of volatility. If you would invest  2,902  in Tecsys Inc on October 1, 2024 and sell it today you would earn a total of  426.00  from holding Tecsys Inc or generate 14.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.92%
Values	Daily Returns

Bank Mandiri Persero  vs.  Tecsys 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 unsteady 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.

Tecsys Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tecsys Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tecsys reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Tecsys

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

The idea behind Bank Mandiri Persero and Tecsys 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.