Correlation Between Visa and BANK MANDIRI

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

By analyzing existing cross correlation between Visa Class A and BANK MANDIRI, you can compare the effects of market volatilities on Visa 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 Visa with a short position of BANK MANDIRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and BANK MANDIRI.

Diversification Opportunities for Visa and BANK MANDIRI

-0.67

Correlation Coefficient

Visa  BANK MANDIRI

Excellent diversification

The 3 months correlation between Visa and BANK is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI and Visa 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 Visa Class A 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 has no effect on the direction of Visa i.e., Visa and BANK MANDIRI go up and down completely randomly.

Pair Corralation between Visa and BANK MANDIRI

Taking into account the 90-day investment horizon Visa Class A is expected to generate 0.51 times more return on investment than BANK MANDIRI. However, Visa Class A is 1.96 times less risky than BANK MANDIRI. It trades about 0.11 of its potential returns per unit of risk. BANK MANDIRI is currently generating about -0.07 per unit of risk. If you would invest  28,992  in Visa Class A on September 14, 2024 and sell it today you would earn a total of  2,431  from holding Visa Class A or generate 8.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Visa Class A  vs.  BANK MANDIRI

Visa Class A

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visa Class A are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Visa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Visa and BANK MANDIRI

The main advantage of trading using opposite Visa and BANK MANDIRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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 Visa Class A and BANK MANDIRI 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.