Correlation Between Arkadia Digital and Repower Asia

Can any of the company-specific risk be diversified away by investing in both Arkadia Digital and Repower Asia 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 Repower Asia 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 Repower Asia Indonesia, you can compare the effects of market volatilities on Arkadia Digital and Repower Asia 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 Repower Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkadia Digital and Repower Asia.

Diversification Opportunities for Arkadia Digital and Repower Asia

0.67

Correlation Coefficient

Arkadia Digital  Repower Asia

Poor diversification

The 3 months correlation between Arkadia and Repower is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arkadia Digital Media and Repower Asia Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repower Asia Indonesia 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 Repower Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repower Asia Indonesia has no effect on the direction of Arkadia Digital i.e., Arkadia Digital and Repower Asia go up and down completely randomly.

Pair Corralation between Arkadia Digital and Repower Asia

Assuming the 90 days trading horizon Arkadia Digital Media is expected to generate 0.51 times more return on investment than Repower Asia. However, Arkadia Digital Media is 1.96 times less risky than Repower Asia. It trades about -0.01 of its potential returns per unit of risk. Repower Asia Indonesia is currently generating about -0.04 per unit of risk. If you would invest  1,600  in Arkadia Digital Media on September 21, 2024 and sell it today you would lose (100.00) from holding Arkadia Digital Media or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arkadia Digital Media  vs.  Repower Asia Indonesia

Arkadia Digital Media

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Arkadia Digital Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Arkadia Digital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Repower Asia Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repower Asia Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Arkadia Digital and Repower Asia

The main advantage of trading using opposite Arkadia Digital and Repower Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkadia Digital position performs unexpectedly, Repower Asia 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 Repower Asia will offset losses from the drop in Repower Asia's long position.

The idea behind Arkadia Digital Media and Repower Asia Indonesia 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.