Correlation Between BANK MANDIRI and First Quantum

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

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

Diversification Opportunities for BANK MANDIRI and First Quantum

-0.52

Correlation Coefficient

BANK MANDIRI  First Quantum

Excellent diversification

The 3 months correlation between BANK and First is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and First Quantum go up and down completely randomly.

Pair Corralation between BANK MANDIRI and First Quantum

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the First Quantum. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.27 times less risky than First Quantum. The stock trades about -0.06 of its potential returns per unit of risk. The First Quantum Minerals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  962.00  in First Quantum Minerals on September 5, 2024 and sell it today you would earn a total of  319.00  from holding First Quantum Minerals or generate 33.16% return on investment over 90 days.

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

BANK MANDIRI  vs.  First Quantum Minerals

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 latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

First Quantum Minerals

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with BANK MANDIRI and First Quantum

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

The idea behind BANK MANDIRI and First Quantum Minerals 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.