Correlation Between Darma Henwa and Arkadia Digital
Can any of the company-specific risk be diversified away by investing in both Darma Henwa and Arkadia Digital 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 Darma Henwa and Arkadia Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Darma Henwa Tbk and Arkadia Digital Media, you can compare the effects of market volatilities on Darma Henwa and Arkadia Digital 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 Darma Henwa with a short position of Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Darma Henwa and Arkadia Digital.
Diversification Opportunities for Darma Henwa and Arkadia Digital
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Darma and Arkadia is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Darma Henwa Tbk and Arkadia Digital Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arkadia Digital Media and Darma Henwa 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 Darma Henwa Tbk are associated (or correlated) with Arkadia Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arkadia Digital Media has no effect on the direction of Darma Henwa i.e., Darma Henwa and Arkadia Digital go up and down completely randomly.
Pair Corralation between Darma Henwa and Arkadia Digital
Assuming the 90 days trading horizon Darma Henwa Tbk is expected to generate 1.87 times more return on investment than Arkadia Digital. However, Darma Henwa is 1.87 times more volatile than Arkadia Digital Media. It trades about 0.11 of its potential returns per unit of risk. Arkadia Digital Media is currently generating about -0.16 per unit of risk. If you would invest 9,400 in Darma Henwa Tbk on August 31, 2024 and sell it today you would earn a total of 1,100 from holding Darma Henwa Tbk or generate 11.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Darma Henwa Tbk vs. Arkadia Digital Media
Performance |
| Timeline |
| Darma Henwa Tbk |
| Arkadia Digital Media |
Darma Henwa and Arkadia Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Darma Henwa and Arkadia Digital
The main advantage of trading using opposite Darma Henwa and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Darma Henwa position performs unexpectedly, Arkadia Digital 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 Arkadia Digital will offset losses from the drop in Arkadia Digital's long position.| Darma Henwa vs. Perusahaan Gas Negara | Darma Henwa vs. Vale Indonesia Tbk | Darma Henwa vs. Telkom Indonesia Tbk | Darma Henwa vs. Mitra Pinasthika Mustika |
| Arkadia Digital vs. Electronic City Indonesia | Arkadia Digital vs. MD Pictures Tbk | Arkadia Digital vs. Bintang Oto Global | Arkadia Digital vs. Graha Layar Prima |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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