Correlation Between AD Plastik and INA Industrija

Can any of the company-specific risk be diversified away by investing in both AD Plastik and INA Industrija 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 AD Plastik and INA Industrija into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AD Plastik dd and INA Industrija Nafte dd, you can compare the effects of market volatilities on AD Plastik and INA Industrija 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 AD Plastik with a short position of INA Industrija. Check out your portfolio center. Please also check ongoing floating volatility patterns of AD Plastik and INA Industrija.

Diversification Opportunities for AD Plastik and INA Industrija

0.74

Correlation Coefficient

AD Plastik  INA Industrija

Poor diversification

The 3 months correlation between ADPL and INA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AD Plastik dd and INA Industrija Nafte dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INA Industrija Nafte and AD Plastik 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 AD Plastik dd are associated (or correlated) with INA Industrija. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INA Industrija Nafte has no effect on the direction of AD Plastik i.e., AD Plastik and INA Industrija go up and down completely randomly.

Pair Corralation between AD Plastik and INA Industrija

Assuming the 90 days trading horizon AD Plastik dd is expected to under-perform the INA Industrija. In addition to that, AD Plastik is 1.11 times more volatile than INA Industrija Nafte dd. It trades about -0.14 of its total potential returns per unit of risk. INA Industrija Nafte dd is currently generating about 0.03 per unit of volatility. If you would invest  46,000  in INA Industrija Nafte dd on September 12, 2024 and sell it today you would earn a total of  600.00  from holding INA Industrija Nafte dd or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	44.64%
Values	Daily Returns

AD Plastik dd  vs.  INA Industrija Nafte dd

AD Plastik dd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AD Plastik dd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

INA Industrija Nafte

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days INA Industrija Nafte dd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INA Industrija is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AD Plastik and INA Industrija

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

The idea behind AD Plastik dd and INA Industrija Nafte dd 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .