Correlation Between BANK MANDIRI and RATIONAL Aktiengesellscha

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

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

Diversification Opportunities for BANK MANDIRI and RATIONAL Aktiengesellscha

0.69

Correlation Coefficient

BANK MANDIRI  RATIONAL Aktiengesellscha

Poor diversification

The 3 months correlation between BANK and RATIONAL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and RATIONAL Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL Aktiengesellscha has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and RATIONAL Aktiengesellscha go up and down completely randomly.

Pair Corralation between BANK MANDIRI and RATIONAL Aktiengesellscha

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 3.71 times less return on investment than RATIONAL Aktiengesellscha. In addition to that, BANK MANDIRI is 1.16 times more volatile than RATIONAL Aktiengesellschaft. It trades about 0.01 of its total potential returns per unit of risk. RATIONAL Aktiengesellschaft is currently generating about 0.06 per unit of volatility. If you would invest  53,889  in RATIONAL Aktiengesellschaft on September 26, 2024 and sell it today you would earn a total of  29,311  from holding RATIONAL Aktiengesellschaft or generate 54.39% return on investment over 90 days.

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

BANK MANDIRI  vs.  RATIONAL Aktiengesellschaft

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.

RATIONAL Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATIONAL Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BANK MANDIRI and RATIONAL Aktiengesellscha

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

The idea behind BANK MANDIRI and RATIONAL Aktiengesellschaft 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.