Correlation Between MD Pictures and Arkadia Digital

Can any of the company-specific risk be diversified away by investing in both MD Pictures 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 MD Pictures and Arkadia Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MD Pictures Tbk and Arkadia Digital Media, you can compare the effects of market volatilities on MD Pictures 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 MD Pictures with a short position of Arkadia Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MD Pictures and Arkadia Digital.

Diversification Opportunities for MD Pictures and Arkadia Digital

0.21

Correlation Coefficient

MD Pictures  Arkadia Digital

Modest diversification

The 3 months correlation between FILM and Arkadia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding MD Pictures 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 MD Pictures 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 MD Pictures 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 MD Pictures i.e., MD Pictures and Arkadia Digital go up and down completely randomly.

Pair Corralation between MD Pictures and Arkadia Digital

Assuming the 90 days trading horizon MD Pictures Tbk is expected to generate 1.0 times more return on investment than Arkadia Digital. However, MD Pictures is 1.0 times more volatile than Arkadia Digital Media. It trades about 0.1 of its potential returns per unit of risk. Arkadia Digital Media is currently generating about 0.02 per unit of risk. If you would invest  311,000  in MD Pictures Tbk on September 30, 2024 and sell it today you would earn a total of  65,000  from holding MD Pictures Tbk or generate 20.9% return on investment over 90 days.

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

MD Pictures Tbk  vs.  Arkadia Digital Media

MD Pictures Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MD Pictures Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MD Pictures disclosed solid returns over the last few months and may actually be approaching a breakup point.

Arkadia Digital Media

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arkadia Digital Media are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with MD Pictures and Arkadia Digital

The main advantage of trading using opposite MD Pictures and Arkadia Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MD Pictures 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.

The idea behind MD Pictures Tbk and Arkadia Digital Media 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.