Correlation Between Arkadia Digital and PT Estee

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

Diversification Opportunities for Arkadia Digital and PT Estee

-0.41

Correlation Coefficient

Arkadia Digital  PT Estee

Very good diversification

The 3 months correlation between Arkadia and EURO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arkadia Digital Media and PT Estee Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Estee Gold 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 PT Estee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Estee Gold has no effect on the direction of Arkadia Digital i.e., Arkadia Digital and PT Estee go up and down completely randomly.

Pair Corralation between Arkadia Digital and PT Estee

Assuming the 90 days trading horizon Arkadia Digital is expected to generate 39.83 times less return on investment than PT Estee. But when comparing it to its historical volatility, Arkadia Digital Media is 1.39 times less risky than PT Estee. It trades about 0.02 of its potential returns per unit of risk. PT Estee Gold is currently generating about 0.63 of returns per unit of risk over similar time horizon. If you would invest  9,400  in PT Estee Gold on October 25, 2024 and sell it today you would earn a total of  9,100  from holding PT Estee Gold or generate 96.81% return on investment over 90 days.

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

Arkadia Digital Media  vs.  PT Estee Gold

Arkadia Digital Media

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arkadia Digital Media are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Arkadia Digital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PT Estee Gold

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Estee Gold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Estee may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Arkadia Digital and PT Estee

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

The idea behind Arkadia Digital Media and PT Estee Gold 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..