Correlation Between BANK MANDIRI and T.J. Maxx

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

By analyzing existing cross correlation between BANK MANDIRI and The TJX Companies, you can compare the effects of market volatilities on BANK MANDIRI and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and T.J. Maxx.

Diversification Opportunities for BANK MANDIRI and T.J. Maxx

-0.48

Correlation Coefficient

BANK MANDIRI  T.J. Maxx

Very good diversification

The 3 months correlation between BANK and T.J. is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and T.J. Maxx go up and down completely randomly.

Pair Corralation between BANK MANDIRI and T.J. Maxx

Assuming the 90 days trading horizon BANK MANDIRI is expected to generate 1.3 times less return on investment than T.J. Maxx. In addition to that, BANK MANDIRI is 1.26 times more volatile than The TJX Companies. It trades about 0.09 of its total potential returns per unit of risk. The TJX Companies is currently generating about 0.14 per unit of volatility. If you would invest  9,507  in The TJX Companies on September 1, 2024 and sell it today you would earn a total of  2,443  from holding The TJX Companies or generate 25.7% return on investment over 90 days.

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

BANK MANDIRI  vs.  The TJX Companies

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 comparatively stable basic indicators, BANK MANDIRI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

TJX Companies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The TJX Companies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, T.J. Maxx reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and T.J. Maxx

The main advantage of trading using opposite BANK MANDIRI and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.

The idea behind BANK MANDIRI and The TJX Companies 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.