Correlation Between INA Industrija and Arena Hospitality

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

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

Diversification Opportunities for INA Industrija and Arena Hospitality

0.01

Correlation Coefficient

INA Industrija  Arena Hospitality

Significant diversification

The 3 months correlation between INA and Arena is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding INA Industrija Nafte dd and Arena Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arena Hospitality and INA Industrija 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 INA Industrija Nafte dd are associated (or correlated) with Arena Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arena Hospitality has no effect on the direction of INA Industrija i.e., INA Industrija and Arena Hospitality go up and down completely randomly.

Pair Corralation between INA Industrija and Arena Hospitality

Assuming the 90 days trading horizon INA Industrija is expected to generate 1.99 times less return on investment than Arena Hospitality. In addition to that, INA Industrija is 1.67 times more volatile than Arena Hospitality Group. It trades about 0.05 of its total potential returns per unit of risk. Arena Hospitality Group is currently generating about 0.16 per unit of volatility. If you would invest  3,140  in Arena Hospitality Group on December 2, 2024 and sell it today you would earn a total of  300.00  from holding Arena Hospitality Group or generate 9.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	55.1%
Values	Daily Returns

INA Industrija Nafte dd  vs.  Arena Hospitality Group

INA Industrija Nafte

Risk-Adjusted Performance

Insignificant

Over the last 90 days INA Industrija Nafte dd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, INA Industrija is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Arena Hospitality

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arena Hospitality Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arena Hospitality may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with INA Industrija and Arena Hospitality

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

The idea behind INA Industrija Nafte dd and Arena Hospitality Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.