Correlation Between BANK MANDIRI and Warner Music

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

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

Diversification Opportunities for BANK MANDIRI and Warner Music

-0.75

Correlation Coefficient

BANK MANDIRI  Warner Music

Pay attention - limited upside

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

Pair Corralation between BANK MANDIRI and Warner Music

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Warner Music. In addition to that, BANK MANDIRI is 1.59 times more volatile than Warner Music Group. It trades about -0.08 of its total potential returns per unit of risk. Warner Music Group is currently generating about 0.23 per unit of volatility. If you would invest  2,479  in Warner Music Group on September 4, 2024 and sell it today you would earn a total of  597.00  from holding Warner Music Group or generate 24.08% 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.  Warner Music Group

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 fragile 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.

Warner Music Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Music Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Warner Music reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Warner Music

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

The idea behind BANK MANDIRI and Warner Music 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.