Correlation Between United Tennessee and Bank Mandiri

Can any of the company-specific risk be diversified away by investing in both United Tennessee and Bank Mandiri 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 United Tennessee and Bank Mandiri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between United Tennessee Bankshares and Bank Mandiri Persero, you can compare the effects of market volatilities on United Tennessee and Bank Mandiri 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 United Tennessee with a short position of Bank Mandiri. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Tennessee and Bank Mandiri.

Diversification Opportunities for United Tennessee and Bank Mandiri

-0.28

Correlation Coefficient

United Tennessee  Bank Mandiri

Very good diversification

The 3 months correlation between United and Bank is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding United Tennessee Bankshares and Bank Mandiri Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mandiri Persero and United Tennessee 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 United Tennessee Bankshares are associated (or correlated) with Bank Mandiri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mandiri Persero has no effect on the direction of United Tennessee i.e., United Tennessee and Bank Mandiri go up and down completely randomly.

Pair Corralation between United Tennessee and Bank Mandiri

Given the investment horizon of 90 days United Tennessee is expected to generate 3.61 times less return on investment than Bank Mandiri. In addition to that, United Tennessee is 1.34 times more volatile than Bank Mandiri Persero. It trades about 0.01 of its total potential returns per unit of risk. Bank Mandiri Persero is currently generating about 0.04 per unit of volatility. If you would invest  1,209  in Bank Mandiri Persero on August 31, 2024 and sell it today you would earn a total of  402.00  from holding Bank Mandiri Persero or generate 33.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	30.91%
Values	Daily Returns

United Tennessee Bankshares  vs.  Bank Mandiri Persero

United Tennessee Ban

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Tennessee Bankshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, United Tennessee is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Bank Mandiri Persero

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Mandiri Persero has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with United Tennessee and Bank Mandiri

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

The idea behind United Tennessee Bankshares and Bank Mandiri Persero 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.