Correlation Between Mahaka Media and Arkadia Digital

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

By analyzing existing cross correlation between Mahaka Media Tbk and Arkadia Digital Media, you can compare the effects of market volatilities on Mahaka Media and Arkadia Digital 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 Mahaka Media with a short position of Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mahaka Media and Arkadia Digital.

Diversification Opportunities for Mahaka Media and Arkadia Digital

0.68

Correlation Coefficient

Mahaka Media  Arkadia Digital

Poor diversification

The 3 months correlation between Mahaka and Arkadia is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mahaka Media Tbk and Arkadia Digital Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkadia Digital Media and Mahaka Media 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 Mahaka Media Tbk are associated (or correlated) with Arkadia Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkadia Digital Media has no effect on the direction of Mahaka Media i.e., Mahaka Media and Arkadia Digital go up and down completely randomly.

Pair Corralation between Mahaka Media and Arkadia Digital

Assuming the 90 days trading horizon Mahaka Media is expected to generate 1.65 times less return on investment than Arkadia Digital. In addition to that, Mahaka Media is 1.13 times more volatile than Arkadia Digital Media. It trades about 0.06 of its total potential returns per unit of risk. Arkadia Digital Media is currently generating about 0.11 per unit of volatility. If you would invest  1,400  in Arkadia Digital Media on September 13, 2024 and sell it today you would earn a total of  100.00  from holding Arkadia Digital Media or generate 7.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Mahaka Media Tbk  vs.  Arkadia Digital Media

Mahaka Media Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mahaka Media Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Arkadia Digital Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arkadia Digital Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Arkadia Digital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Mahaka Media and Arkadia Digital

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

The idea behind Mahaka Media Tbk and Arkadia Digital Media 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 CEOs Directory module to screen CEOs from public companies around the world.