Correlation Between Bank Mandiri and Subaru Corp

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

By analyzing existing cross correlation between Bank Mandiri Persero and Subaru Corp ADR, you can compare the effects of market volatilities on Bank Mandiri and Subaru Corp 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 Subaru Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mandiri and Subaru Corp.

Diversification Opportunities for Bank Mandiri and Subaru Corp

-0.73

Correlation Coefficient

Bank Mandiri  Subaru Corp

Pay attention - limited upside

The 3 months correlation between Bank and Subaru is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Subaru Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subaru Corp ADR 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 Persero are associated (or correlated) with Subaru Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subaru Corp ADR has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Subaru Corp go up and down completely randomly.

Pair Corralation between Bank Mandiri and Subaru Corp

Assuming the 90 days horizon Bank Mandiri Persero is expected to generate 0.78 times more return on investment than Subaru Corp. However, Bank Mandiri Persero is 1.27 times less risky than Subaru Corp. It trades about 0.1 of its potential returns per unit of risk. Subaru Corp ADR is currently generating about -0.03 per unit of risk. If you would invest  1,854  in Bank Mandiri Persero on June 29, 2024 and sell it today you would earn a total of  52.00  from holding Bank Mandiri Persero or generate 2.8% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Subaru Corp ADR

Bank Mandiri Persero

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Mandiri Persero are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Bank Mandiri showed solid returns over the last few months and may actually be approaching a breakup point.

Subaru Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Subaru Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical 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 Bank Mandiri and Subaru Corp

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

The idea behind Bank Mandiri Persero and Subaru Corp ADR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.