Correlation Between Bank Mandiri and West Shore
Can any of the company-specific risk be diversified away by investing in both Bank Mandiri and West Shore 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 West Shore 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 West Shore Bank, you can compare the effects of market volatilities on Bank Mandiri and West Shore 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 West Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and West Shore.
Diversification Opportunities for Bank Mandiri and West Shore
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and West is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and West Shore Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West Shore Bank 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 West Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West Shore Bank has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and West Shore go up and down completely randomly.
Pair Corralation between Bank Mandiri and West Shore
Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the West Shore. In addition to that, Bank Mandiri is 1.9 times more volatile than West Shore Bank. It trades about -0.36 of its total potential returns per unit of risk. West Shore Bank is currently generating about 0.13 per unit of volatility. If you would invest 2,450 in West Shore Bank on September 24, 2024 and sell it today you would earn a total of 75.00 from holding West Shore Bank or generate 3.06% 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. West Shore Bank
Performance |
Timeline |
Bank Mandiri Persero |
West Shore Bank |
Bank Mandiri and West Shore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Mandiri and West Shore
The main advantage of trading using opposite Bank Mandiri and West Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mandiri position performs unexpectedly, West Shore 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 West Shore will offset losses from the drop in West Shore's long position.Bank Mandiri vs. Banco Bradesco SA | Bank Mandiri vs. Itau Unibanco Banco | Bank Mandiri vs. Lloyds Banking Group | Bank Mandiri vs. Deutsche Bank AG |
West Shore vs. Banco Bradesco SA | West Shore vs. Itau Unibanco Banco | West Shore vs. Lloyds Banking Group | West Shore vs. Deutsche Bank AG |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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