Correlation Between Bank Mandiri and NowVertical

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

Diversification Opportunities for Bank Mandiri and NowVertical

-0.75

Correlation Coefficient

Bank Mandiri  NowVertical

Pay attention - limited upside

The 3 months correlation between Bank and NowVertical is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and NowVertical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NowVertical Group 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 NowVertical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NowVertical Group has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and NowVertical go up and down completely randomly.

Pair Corralation between Bank Mandiri and NowVertical

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the NowVertical. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bank Mandiri Persero is 6.29 times less risky than NowVertical. The pink sheet trades about -0.22 of its potential returns per unit of risk. The NowVertical Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9.87  in NowVertical Group on September 26, 2024 and sell it today you would earn a total of  16.13  from holding NowVertical Group or generate 163.42% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  NowVertical Group

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NowVertical Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NowVertical Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NowVertical reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and NowVertical

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

The idea behind Bank Mandiri Persero and NowVertical Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.