Correlation Between Hrvatski Telekom and Dalekovod

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

Diversification Opportunities for Hrvatski Telekom and Dalekovod

0.65

Correlation Coefficient

Hrvatski Telekom  Dalekovod

Poor diversification

The 3 months correlation between Hrvatski and Dalekovod is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hrvatski Telekom dd and Dalekovod dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalekovod 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 Dalekovod. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalekovod dd has no effect on the direction of Hrvatski Telekom i.e., Hrvatski Telekom and Dalekovod go up and down completely randomly.

Pair Corralation between Hrvatski Telekom and Dalekovod

Assuming the 90 days trading horizon Hrvatski Telekom is expected to generate 4.87 times less return on investment than Dalekovod. But when comparing it to its historical volatility, Hrvatski Telekom dd is 2.59 times less risky than Dalekovod. It trades about 0.08 of its potential returns per unit of risk. Dalekovod dd is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Dalekovod dd on December 1, 2024 and sell it today you would earn a total of  84.00  from holding Dalekovod dd or generate 24.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Hrvatski Telekom dd  vs.  Dalekovod dd

Hrvatski Telekom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hrvatski Telekom dd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hrvatski Telekom is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dalekovod dd

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dalekovod dd are ranked lower than 11 (%) 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.

Pair Trading with Hrvatski Telekom and Dalekovod

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

The idea behind Hrvatski Telekom dd and Dalekovod 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.