Correlation Between Arkadia Digital and Metro Healthcare

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

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

Diversification Opportunities for Arkadia Digital and Metro Healthcare

0.27

Correlation Coefficient

Arkadia Digital  Metro Healthcare

Modest diversification

The 3 months correlation between Arkadia and Metro is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Arkadia Digital Media and Metro Healthcare Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Healthcare Ind and Arkadia Digital 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 Arkadia Digital Media are associated (or correlated) with Metro Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Healthcare Ind has no effect on the direction of Arkadia Digital i.e., Arkadia Digital and Metro Healthcare go up and down completely randomly.

Pair Corralation between Arkadia Digital and Metro Healthcare

Assuming the 90 days trading horizon Arkadia Digital Media is expected to generate 1.11 times more return on investment than Metro Healthcare. However, Arkadia Digital is 1.11 times more volatile than Metro Healthcare Indonesia. It trades about 0.07 of its potential returns per unit of risk. Metro Healthcare Indonesia is currently generating about 0.03 per unit of risk. If you would invest  1,100  in Arkadia Digital Media on October 9, 2024 and sell it today you would earn a total of  400.00  from holding Arkadia Digital Media or generate 36.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.38%
Values	Daily Returns

Arkadia Digital Media  vs.  Metro Healthcare Indonesia

Arkadia Digital Media

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arkadia Digital Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Metro Healthcare Ind

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Healthcare Indonesia are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Metro Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arkadia Digital and Metro Healthcare

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

The idea behind Arkadia Digital Media and Metro Healthcare Indonesia 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.