Correlation Between Smartfren Telecom and Arkadia Digital
Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom 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 Smartfren Telecom and Arkadia Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smartfren Telecom Tbk and Arkadia Digital Media, you can compare the effects of market volatilities on Smartfren Telecom 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 Smartfren Telecom with a short position of Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Arkadia Digital.
Diversification Opportunities for Smartfren Telecom and Arkadia Digital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smartfren and Arkadia is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom 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 Smartfren Telecom 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 Smartfren Telecom 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 Smartfren Telecom i.e., Smartfren Telecom and Arkadia Digital go up and down completely randomly.
Pair Corralation between Smartfren Telecom and Arkadia Digital
Assuming the 90 days trading horizon Smartfren Telecom Tbk is expected to generate 0.65 times more return on investment than Arkadia Digital. However, Smartfren Telecom Tbk is 1.54 times less risky than Arkadia Digital. It trades about -0.08 of its potential returns per unit of risk. Arkadia Digital Media is currently generating about -0.06 per unit of risk. If you would invest 5,200 in Smartfren Telecom Tbk on August 27, 2024 and sell it today you would lose (2,700) from holding Smartfren Telecom Tbk or give up 51.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smartfren Telecom Tbk vs. Arkadia Digital Media
Performance |
| Timeline |
| Smartfren Telecom Tbk |
| Arkadia Digital Media |
Smartfren Telecom and Arkadia Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smartfren Telecom and Arkadia Digital
The main advantage of trading using opposite Smartfren Telecom and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smartfren Telecom 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.| Smartfren Telecom vs. Mnc Land Tbk | Smartfren Telecom vs. MNC Vision Networks | Smartfren Telecom vs. Medikaloka Hermina PT |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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