Correlation Between BANK MANDIRI and GrafTech International

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and GrafTech International 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 GrafTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK MANDIRI and GrafTech International, you can compare the effects of market volatilities on BANK MANDIRI and GrafTech International 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 GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and GrafTech International.

Diversification Opportunities for BANK MANDIRI and GrafTech International

-0.68

Correlation Coefficient

BANK MANDIRI  GrafTech International

Excellent diversification

The 3 months correlation between BANK and GrafTech is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International 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 are associated (or correlated) with GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and GrafTech International go up and down completely randomly.

Pair Corralation between BANK MANDIRI and GrafTech International

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the GrafTech International. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 2.79 times less risky than GrafTech International. The stock trades about -0.14 of its potential returns per unit of risk. The GrafTech International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  88.00  in GrafTech International on September 23, 2024 and sell it today you would earn a total of  67.00  from holding GrafTech International or generate 76.14% return on investment over 90 days.

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

BANK MANDIRI  vs.  GrafTech International

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

GrafTech International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and GrafTech International

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

The idea behind BANK MANDIRI and GrafTech International 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.