Correlation Between Hrvatski Telekom and Atlantska Plovidba

Can any of the company-specific risk be diversified away by investing in both Hrvatski Telekom and Atlantska Plovidba 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 Atlantska Plovidba 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 Atlantska Plovidba dd, you can compare the effects of market volatilities on Hrvatski Telekom and Atlantska Plovidba 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 Atlantska Plovidba. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hrvatski Telekom and Atlantska Plovidba.

Diversification Opportunities for Hrvatski Telekom and Atlantska Plovidba

-0.18

Correlation Coefficient

Hrvatski Telekom  Atlantska Plovidba

Good diversification

The 3 months correlation between Hrvatski and Atlantska is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hrvatski Telekom dd and Atlantska Plovidba dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantska Plovidba 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 Atlantska Plovidba. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantska Plovidba has no effect on the direction of Hrvatski Telekom i.e., Hrvatski Telekom and Atlantska Plovidba go up and down completely randomly.

Pair Corralation between Hrvatski Telekom and Atlantska Plovidba

Assuming the 90 days trading horizon Hrvatski Telekom dd is expected to generate 0.67 times more return on investment than Atlantska Plovidba. However, Hrvatski Telekom dd is 1.48 times less risky than Atlantska Plovidba. It trades about 0.26 of its potential returns per unit of risk. Atlantska Plovidba dd is currently generating about 0.04 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	Insignificant
Accuracy	60.32%
Values	Daily Returns

Hrvatski Telekom dd  vs.  Atlantska Plovidba 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.

Atlantska Plovidba

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantska Plovidba dd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Atlantska Plovidba is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hrvatski Telekom and Atlantska Plovidba

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

The idea behind Hrvatski Telekom dd and Atlantska Plovidba 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.