Correlation Between BANK MANDIRI and ENSTAR GROUP

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

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

Diversification Opportunities for BANK MANDIRI and ENSTAR GROUP

-0.41

Correlation Coefficient

BANK MANDIRI  ENSTAR GROUP

Very good diversification

The 3 months correlation between BANK and ENSTAR is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and ENSTAR GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENSTAR GROUP LTD 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 ENSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENSTAR GROUP LTD has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and ENSTAR GROUP go up and down completely randomly.

Pair Corralation between BANK MANDIRI and ENSTAR GROUP

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 5.75 times less return on investment than ENSTAR GROUP. In addition to that, BANK MANDIRI is 1.6 times more volatile than ENSTAR GROUP LTD. It trades about 0.01 of its total potential returns per unit of risk. ENSTAR GROUP LTD is currently generating about 0.06 per unit of volatility. If you would invest  23,200  in ENSTAR GROUP LTD on September 23, 2024 and sell it today you would earn a total of  7,200  from holding ENSTAR GROUP LTD or generate 31.03% 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.  ENSTAR GROUP LTD

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ENSTAR GROUP LTD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ENSTAR GROUP LTD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ENSTAR GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BANK MANDIRI and ENSTAR GROUP

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

The idea behind BANK MANDIRI and ENSTAR GROUP LTD 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.