Correlation Between BANK MANDIRI and Sandfire Resources

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

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

Diversification Opportunities for BANK MANDIRI and Sandfire Resources

-0.39

Correlation Coefficient

BANK MANDIRI  Sandfire Resources

Very good diversification

The 3 months correlation between BANK and Sandfire is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Sandfire Resources go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Sandfire Resources

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Sandfire Resources. In addition to that, BANK MANDIRI is 1.2 times more volatile than Sandfire Resources Limited. It trades about -0.06 of its total potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.21 per unit of volatility. If you would invest  488.00  in Sandfire Resources Limited on September 5, 2024 and sell it today you would earn a total of  152.00  from holding Sandfire Resources Limited or generate 31.15% return on investment over 90 days.

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

BANK MANDIRI  vs.  Sandfire Resources Limited

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.

Sandfire Resources

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sandfire Resources Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sandfire Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Sandfire Resources

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

The idea behind BANK MANDIRI and Sandfire Resources Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..