Correlation Between Institut IGH and INA Industrija

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

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

Diversification Opportunities for Institut IGH and INA Industrija

-0.28

Correlation Coefficient

Institut IGH  INA Industrija

Very good diversification

The 3 months correlation between Institut and INA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Institut IGH dd and INA Industrija Nafte dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INA Industrija Nafte and Institut IGH 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 Institut IGH dd are associated (or correlated) with INA Industrija. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INA Industrija Nafte has no effect on the direction of Institut IGH i.e., Institut IGH and INA Industrija go up and down completely randomly.

Pair Corralation between Institut IGH and INA Industrija

Assuming the 90 days trading horizon Institut IGH dd is expected to generate 4.16 times more return on investment than INA Industrija. However, Institut IGH is 4.16 times more volatile than INA Industrija Nafte dd. It trades about 0.13 of its potential returns per unit of risk. INA Industrija Nafte dd is currently generating about 0.07 per unit of risk. If you would invest  1,500  in Institut IGH dd on December 30, 2024 and sell it today you would earn a total of  500.00  from holding Institut IGH dd or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	77.5%
Values	Daily Returns

Institut IGH dd  vs.  INA Industrija Nafte dd

Institut IGH dd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Institut IGH dd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Institut IGH exhibited solid returns over the last few months and may actually be approaching a breakup point.

INA Industrija Nafte

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in INA Industrija Nafte dd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, INA Industrija may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Institut IGH and INA Industrija

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

The idea behind Institut IGH dd and INA Industrija Nafte 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..