Correlation Between Arkadia Digital and Hero Supermarket
Can any of the company-specific risk be diversified away by investing in both Arkadia Digital and Hero Supermarket 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 Hero Supermarket 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 Hero Supermarket Tbk, you can compare the effects of market volatilities on Arkadia Digital and Hero Supermarket 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 Hero Supermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkadia Digital and Hero Supermarket.
Diversification Opportunities for Arkadia Digital and Hero Supermarket
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arkadia and Hero is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Arkadia Digital Media and Hero Supermarket Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hero Supermarket 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 Hero Supermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hero Supermarket Tbk has no effect on the direction of Arkadia Digital i.e., Arkadia Digital and Hero Supermarket go up and down completely randomly.
Pair Corralation between Arkadia Digital and Hero Supermarket
Assuming the 90 days trading horizon Arkadia Digital Media is expected to generate 2.09 times more return on investment than Hero Supermarket. However, Arkadia Digital is 2.09 times more volatile than Hero Supermarket Tbk. It trades about 0.02 of its potential returns per unit of risk. Hero Supermarket Tbk is currently generating about -0.14 per unit of risk. If you would invest 1,500 in Arkadia Digital Media on January 20, 2024 and sell it today you would earn a total of 0.00 from holding Arkadia Digital Media or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 93.75% |
| Values | Daily Returns |
Arkadia Digital Media vs. Hero Supermarket Tbk
Performance |
| Timeline |
| Arkadia Digital Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hero Supermarket Tbk |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Arkadia Digital and Hero Supermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkadia Digital and Hero Supermarket
The main advantage of trading using opposite Arkadia Digital and Hero Supermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkadia Digital position performs unexpectedly, Hero Supermarket 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 Hero Supermarket will offset losses from the drop in Hero Supermarket's long position.The idea behind Arkadia Digital Media and Hero Supermarket 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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