Correlation Between BANK MANDIRI and Gemfields Group

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Gemfields 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 Gemfields 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 Gemfields Group Limited, you can compare the effects of market volatilities on BANK MANDIRI and Gemfields 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 Gemfields Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Gemfields Group.

Diversification Opportunities for BANK MANDIRI and Gemfields Group

0.86

Correlation Coefficient

BANK MANDIRI  Gemfields Group

Very poor diversification

The 3 months correlation between BANK and Gemfields is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Gemfields Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields 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 Gemfields Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Gemfields Group go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Gemfields Group

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 0.42 times more return on investment than Gemfields Group. However, BANK MANDIRI is 2.35 times less risky than Gemfields Group. It trades about -0.27 of its potential returns per unit of risk. Gemfields Group Limited is currently generating about -0.24 per unit of risk. If you would invest  35.00  in BANK MANDIRI on September 24, 2024 and sell it today you would lose (5.00) from holding BANK MANDIRI or give up 14.29% of portfolio value over 90 days.

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

BANK MANDIRI  vs.  Gemfields Group 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 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.

Gemfields Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gemfields Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BANK MANDIRI and Gemfields Group

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

The idea behind BANK MANDIRI and Gemfields Group 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.