Correlation Between Lion Metal and Arkadia Digital
Can any of the company-specific risk be diversified away by investing in both Lion Metal 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 Lion Metal and Arkadia Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Metal Works and Arkadia Digital Media, you can compare the effects of market volatilities on Lion Metal 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 Lion Metal with a short position of Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Metal and Arkadia Digital.
Diversification Opportunities for Lion Metal and Arkadia Digital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lion and Arkadia is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lion Metal Works 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 Lion Metal 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 Lion Metal Works 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 Lion Metal i.e., Lion Metal and Arkadia Digital go up and down completely randomly.
Pair Corralation between Lion Metal and Arkadia Digital
Assuming the 90 days trading horizon Lion Metal Works is expected to generate 1.26 times more return on investment than Arkadia Digital. However, Lion Metal is 1.26 times more volatile than Arkadia Digital Media. It trades about 0.0 of its potential returns per unit of risk. Arkadia Digital Media is currently generating about -0.05 per unit of risk. If you would invest 48,756 in Lion Metal Works on August 30, 2024 and sell it today you would lose (18,756) from holding Lion Metal Works or give up 38.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lion Metal Works vs. Arkadia Digital Media
Performance |
| Timeline |
| Lion Metal Works |
| Arkadia Digital Media |
Lion Metal and Arkadia Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Metal and Arkadia Digital
The main advantage of trading using opposite Lion Metal and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Metal 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.| Lion Metal vs. Lionmesh Prima Tbk | Lion Metal vs. Pelangi Indah Canindo | Lion Metal vs. Indal Aluminium Industry | Lion Metal vs. Intanwijaya Internasional Tbk |
| 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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