Correlation Between ADHI KARYA and ATRESMEDIA

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

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

Diversification Opportunities for ADHI KARYA and ATRESMEDIA

-0.53

Correlation Coefficient

ADHI KARYA  ATRESMEDIA

Excellent diversification

The 3 months correlation between ADHI and ATRESMEDIA is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA and ATRESMEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRESMEDIA and ADHI KARYA 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 ADHI KARYA are associated (or correlated) with ATRESMEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRESMEDIA has no effect on the direction of ADHI KARYA i.e., ADHI KARYA and ATRESMEDIA go up and down completely randomly.

Pair Corralation between ADHI KARYA and ATRESMEDIA

Assuming the 90 days trading horizon ADHI KARYA is expected to generate 18.42 times more return on investment than ATRESMEDIA. However, ADHI KARYA is 18.42 times more volatile than ATRESMEDIA. It trades about 0.07 of its potential returns per unit of risk. ATRESMEDIA is currently generating about 0.24 per unit of risk. If you would invest  0.85  in ADHI KARYA on December 25, 2024 and sell it today you would lose (0.40) from holding ADHI KARYA or give up 47.06% of portfolio value over 90 days.

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

ADHI KARYA  vs.  ATRESMEDIA

ADHI KARYA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ADHI KARYA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, ADHI KARYA unveiled solid returns over the last few months and may actually be approaching a breakup point.

ATRESMEDIA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATRESMEDIA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ATRESMEDIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADHI KARYA and ATRESMEDIA

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

The idea behind ADHI KARYA and ATRESMEDIA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.