Correlation Between Arkadia Digital and MD Pictures

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

Diversification Opportunities for Arkadia Digital and MD Pictures

0.45

Correlation Coefficient

Arkadia Digital  MD Pictures

Very weak diversification

The 3 months correlation between Arkadia and FILM is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Arkadia Digital Media and MD Pictures Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MD Pictures Tbk 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 MD Pictures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MD Pictures Tbk has no effect on the direction of Arkadia Digital i.e., Arkadia Digital and MD Pictures go up and down completely randomly.

Pair Corralation between Arkadia Digital and MD Pictures

Assuming the 90 days trading horizon Arkadia Digital is expected to generate 1.06 times less return on investment than MD Pictures. In addition to that, Arkadia Digital is 1.07 times more volatile than MD Pictures Tbk. It trades about 0.1 of its total potential returns per unit of risk. MD Pictures Tbk is currently generating about 0.11 per unit of volatility. If you would invest  319,000  in MD Pictures Tbk on October 20, 2024 and sell it today you would earn a total of  71,000  from holding MD Pictures Tbk or generate 22.26% return on investment over 90 days.

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

Arkadia Digital Media  vs.  MD Pictures Tbk

Arkadia Digital Media

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arkadia Digital Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Arkadia Digital disclosed solid returns over the last few months and may actually be approaching a breakup point.

MD Pictures Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MD Pictures Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MD Pictures disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arkadia Digital and MD Pictures

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

The idea behind Arkadia Digital Media and MD Pictures Tbk 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.