Correlation Between Bank Mandiri and Orsted AS

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

Diversification Opportunities for Bank Mandiri and Orsted AS

-0.31

Correlation Coefficient

Bank Mandiri  Orsted AS

Very good diversification

The 3 months correlation between Bank and Orsted is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mandiri Persero and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS 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 Orsted AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS has no effect on the direction of Bank Mandiri i.e., Bank Mandiri and Orsted AS go up and down completely randomly.

Pair Corralation between Bank Mandiri and Orsted AS

Assuming the 90 days horizon Bank Mandiri is expected to generate 57.22 times less return on investment than Orsted AS. In addition to that, Bank Mandiri is 1.71 times more volatile than Orsted AS. It trades about 0.0 of its total potential returns per unit of risk. Orsted AS is currently generating about 0.1 per unit of volatility. If you would invest  5,454  in Orsted AS on February 2, 2024 and sell it today you would earn a total of  312.00  from holding Orsted AS or generate 5.72% return on investment over 90 days.

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

Bank Mandiri Persero  vs.  Orsted AS

Bank Mandiri Persero

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Mandiri Persero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bank Mandiri may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Orsted AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Orsted AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Orsted AS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Mandiri and Orsted AS

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

The idea behind Bank Mandiri Persero and Orsted AS 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.