Correlation Between Bank Mandiri and Arcadis NV

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

Diversification Opportunities for Bank Mandiri and Arcadis NV

-0.63

Correlation Coefficient

Bank Mandiri  Arcadis NV

Excellent diversification

The 3 months correlation between Bank and Arcadis is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Arcadis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadis NV 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 Arcadis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadis NV has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Arcadis NV go up and down completely randomly.

Pair Corralation between Bank Mandiri and Arcadis NV

Assuming the 90 days horizon Bank Mandiri Persero is expected to under-perform the Arcadis NV. In addition to that, Bank Mandiri is 1.38 times more volatile than Arcadis NV. It trades about -0.08 of its total potential returns per unit of risk. Arcadis NV is currently generating about 0.23 per unit of volatility. If you would invest  5,255  in Arcadis NV on February 20, 2024 and sell it today you would earn a total of  1,201  from holding Arcadis NV or generate 22.85% 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.  Arcadis NV

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.

Arcadis NV

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadis NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Arcadis NV reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mandiri and Arcadis NV

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

The idea behind Bank Mandiri Persero and Arcadis NV 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.