Correlation Between Adris Grupa and Podravka Prehrambena

Can any of the company-specific risk be diversified away by investing in both Adris Grupa and Podravka Prehrambena 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 Adris Grupa and Podravka Prehrambena into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Adris Grupa and Podravka Prehrambena

0.49

Correlation Coefficient

Adris Grupa  Podravka Prehrambena

Very weak diversification

The 3 months correlation between Adris and Podravka is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Adris Grupa dd and Podravka Prehrambena Industrij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Podravka Prehrambena and Adris Grupa 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 Adris Grupa dd are associated (or correlated) with Podravka Prehrambena. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Podravka Prehrambena has no effect on the direction of Adris Grupa i.e., Adris Grupa and Podravka Prehrambena go up and down completely randomly.

Pair Corralation between Adris Grupa and Podravka Prehrambena

Assuming the 90 days trading horizon Adris Grupa dd is expected to generate 1.88 times more return on investment than Podravka Prehrambena. However, Adris Grupa is 1.88 times more volatile than Podravka Prehrambena Industrija. It trades about -0.02 of its potential returns per unit of risk. Podravka Prehrambena Industrija is currently generating about -0.16 per unit of risk. If you would invest  8,150  in Adris Grupa dd on September 3, 2024 and sell it today you would lose (150.00) from holding Adris Grupa dd or give up 1.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.58%
Values	Daily Returns

Adris Grupa dd  vs.  Podravka Prehrambena Industrij

Adris Grupa dd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adris Grupa dd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Adris Grupa is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Podravka Prehrambena

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Podravka Prehrambena Industrija has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Adris Grupa and Podravka Prehrambena

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

The idea behind Adris Grupa dd and Podravka Prehrambena Industrija 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.