Correlation Between BANK MANDIRI and MKS Instruments

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

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

Diversification Opportunities for BANK MANDIRI and MKS Instruments

-0.79

Correlation Coefficient

BANK MANDIRI  MKS Instruments

Pay attention - limited upside

The 3 months correlation between BANK and MKS is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and MKS Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKS Instruments 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 MKS Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKS Instruments has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and MKS Instruments go up and down completely randomly.

Pair Corralation between BANK MANDIRI and MKS Instruments

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the MKS Instruments. But the stock apears to be less risky and, when comparing its historical volatility, BANK MANDIRI is 1.05 times less risky than MKS Instruments. The stock trades about -0.07 of its potential returns per unit of risk. The MKS Instruments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9,694  in MKS Instruments on September 13, 2024 and sell it today you would earn a total of  831.00  from holding MKS Instruments or generate 8.57% 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.  MKS Instruments

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 uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

MKS Instruments

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MKS Instruments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MKS Instruments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BANK MANDIRI and MKS Instruments

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

The idea behind BANK MANDIRI and MKS Instruments 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.