Correlation Between Hrvatski Telekom and AD Plastik

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

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

Diversification Opportunities for Hrvatski Telekom and AD Plastik

-0.81

Correlation Coefficient

Hrvatski Telekom  AD Plastik

Pay attention - limited upside

The 3 months correlation between Hrvatski and ADPL is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hrvatski Telekom dd and AD Plastik dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AD Plastik dd and Hrvatski Telekom 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 Hrvatski Telekom dd are associated (or correlated) with AD Plastik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AD Plastik dd has no effect on the direction of Hrvatski Telekom i.e., Hrvatski Telekom and AD Plastik go up and down completely randomly.

Pair Corralation between Hrvatski Telekom and AD Plastik

Assuming the 90 days trading horizon Hrvatski Telekom dd is expected to generate 0.58 times more return on investment than AD Plastik. However, Hrvatski Telekom dd is 1.72 times less risky than AD Plastik. It trades about 0.26 of its potential returns per unit of risk. AD Plastik dd is currently generating about -0.09 per unit of risk. If you would invest  3,160  in Hrvatski Telekom dd on September 3, 2024 and sell it today you would earn a total of  780.00  from holding Hrvatski Telekom dd or generate 24.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	88.89%
Values	Daily Returns

Hrvatski Telekom dd  vs.  AD Plastik dd

Hrvatski Telekom

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hrvatski Telekom dd are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Hrvatski Telekom exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain 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.

Pair Trading with Hrvatski Telekom and AD Plastik

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

The idea behind Hrvatski Telekom dd and AD Plastik 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.