Correlation Between Dalekovod and Zagrebacka Banka

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

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

Diversification Opportunities for Dalekovod and Zagrebacka Banka

0.48

Correlation Coefficient

Dalekovod  Zagrebacka Banka

Very weak diversification

The 3 months correlation between Dalekovod and Zagrebacka is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dalekovod dd and Zagrebacka Banka dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zagrebacka Banka and Dalekovod 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 Dalekovod dd are associated (or correlated) with Zagrebacka Banka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zagrebacka Banka has no effect on the direction of Dalekovod i.e., Dalekovod and Zagrebacka Banka go up and down completely randomly.

Pair Corralation between Dalekovod and Zagrebacka Banka

Assuming the 90 days trading horizon Dalekovod is expected to generate 1.74 times less return on investment than Zagrebacka Banka. In addition to that, Dalekovod is 1.58 times more volatile than Zagrebacka Banka dd. It trades about 0.12 of its total potential returns per unit of risk. Zagrebacka Banka dd is currently generating about 0.33 per unit of volatility. If you would invest  1,930  in Zagrebacka Banka dd on September 1, 2024 and sell it today you would earn a total of  570.00  from holding Zagrebacka Banka dd or generate 29.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Dalekovod dd  vs.  Zagrebacka Banka dd

Dalekovod dd

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalekovod dd are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dalekovod unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zagrebacka Banka

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zagrebacka Banka dd are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Zagrebacka Banka unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalekovod and Zagrebacka Banka

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

The idea behind Dalekovod dd and Zagrebacka Banka 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.