Correlation Between Langgeng Makmur and Arkadia Digital
Can any of the company-specific risk be diversified away by investing in both Langgeng Makmur 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 Langgeng Makmur and Arkadia Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Langgeng Makmur Industri and Arkadia Digital Media, you can compare the effects of market volatilities on Langgeng Makmur 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 Langgeng Makmur with a short position of Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Langgeng Makmur and Arkadia Digital.
Diversification Opportunities for Langgeng Makmur and Arkadia Digital
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Langgeng and Arkadia is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Langgeng Makmur Industri 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 Langgeng Makmur 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 Langgeng Makmur Industri 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 Langgeng Makmur i.e., Langgeng Makmur and Arkadia Digital go up and down completely randomly.
Pair Corralation between Langgeng Makmur and Arkadia Digital
Assuming the 90 days trading horizon Langgeng Makmur Industri is expected to generate 1.3 times more return on investment than Arkadia Digital. However, Langgeng Makmur is 1.3 times more volatile than Arkadia Digital Media. It trades about 0.04 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 13,300 in Langgeng Makmur Industri on August 27, 2024 and sell it today you would earn a total of 4,900 from holding Langgeng Makmur Industri or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Langgeng Makmur Industri vs. Arkadia Digital Media
Performance |
| Timeline |
| Langgeng Makmur Industri |
| Arkadia Digital Media |
Langgeng Makmur and Arkadia Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Langgeng Makmur and Arkadia Digital
The main advantage of trading using opposite Langgeng Makmur and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Langgeng Makmur 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.| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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