Correlation Between INA Industrija and Podravka Prehrambena

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

Diversification Opportunities for INA Industrija and Podravka Prehrambena

0.72

Correlation Coefficient

INA Industrija  Podravka Prehrambena

Poor diversification

The 3 months correlation between INA and Podravka is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding INA Industrija Nafte 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 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 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 INA Industrija i.e., INA Industrija and Podravka Prehrambena go up and down completely randomly.

Pair Corralation between INA Industrija and Podravka Prehrambena

Assuming the 90 days trading horizon INA Industrija is expected to generate 404.67 times less return on investment than Podravka Prehrambena. In addition to that, INA Industrija is 1.45 times more volatile than Podravka Prehrambena Industrija. It trades about 0.0 of its total potential returns per unit of risk. Podravka Prehrambena Industrija is currently generating about 0.09 per unit of volatility. If you would invest  8,516  in Podravka Prehrambena Industrija on September 3, 2024 and sell it today you would earn a total of  6,184  from holding Podravka Prehrambena Industrija or generate 72.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	49.79%
Values	Daily Returns

INA Industrija Nafte dd  vs.  Podravka Prehrambena Industrij

INA Industrija Nafte

Risk-Adjusted Performance

0 of 100

Very Weak

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.

Podravka Prehrambena

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Podravka Prehrambena Industrija has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with INA Industrija and Podravka Prehrambena

The main advantage of trading using opposite INA Industrija and Podravka Prehrambena positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INA Industrija 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 INA Industrija Nafte 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.