Correlation Between Institut IGH and Podravka Prehrambena

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

Diversification Opportunities for Institut IGH and Podravka Prehrambena

0.02

Correlation Coefficient

Institut IGH  Podravka Prehrambena

Significant diversification

The 3 months correlation between Institut and Podravka is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Institut IGH dd and Podravka Prehrambena Industrij in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Podravka Prehrambena 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 Podravka Prehrambena. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Podravka Prehrambena has no effect on the direction of Institut IGH i.e., Institut IGH and Podravka Prehrambena go up and down completely randomly.

Pair Corralation between Institut IGH and Podravka Prehrambena

Assuming the 90 days trading horizon Institut IGH dd is expected to generate 3.8 times more return on investment than Podravka Prehrambena. However, Institut IGH is 3.8 times more volatile than Podravka Prehrambena Industrija. It trades about 0.02 of its potential returns per unit of risk. Podravka Prehrambena Industrija is currently generating about 0.02 per unit of risk. If you would invest  1,850  in Institut IGH dd on December 1, 2024 and sell it today you would lose (70.00) from holding Institut IGH dd or give up 3.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	64.91%
Values	Daily Returns

Institut IGH dd  vs.  Podravka Prehrambena Industrij

Institut IGH dd

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Institut IGH dd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Institut IGH may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Podravka Prehrambena

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Podravka Prehrambena Industrija are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Podravka Prehrambena 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 Institut IGH and Podravka Prehrambena

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

The idea behind Institut IGH dd and Podravka Prehrambena Industrija 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.