Correlation Between Podravka Prehrambena and Atlantic Grupa

Can any of the company-specific risk be diversified away by investing in both Podravka Prehrambena and Atlantic Grupa 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 Podravka Prehrambena and Atlantic Grupa into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Podravka Prehrambena and Atlantic Grupa

-0.08

Correlation Coefficient

Podravka Prehrambena  Atlantic Grupa

Good diversification

The 3 months correlation between Podravka and Atlantic is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Podravka Prehrambena Industrij and Atlantic Grupa dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Grupa dd and Podravka Prehrambena 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 Podravka Prehrambena Industrija are associated (or correlated) with Atlantic Grupa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Grupa dd has no effect on the direction of Podravka Prehrambena i.e., Podravka Prehrambena and Atlantic Grupa go up and down completely randomly.

Pair Corralation between Podravka Prehrambena and Atlantic Grupa

Assuming the 90 days trading horizon Podravka Prehrambena Industrija is expected to generate 1.1 times more return on investment than Atlantic Grupa. However, Podravka Prehrambena is 1.1 times more volatile than Atlantic Grupa dd. It trades about -0.04 of its potential returns per unit of risk. Atlantic Grupa dd is currently generating about -0.05 per unit of risk. If you would invest  15,800  in Podravka Prehrambena Industrija on September 29, 2024 and sell it today you would lose (1,250) from holding Podravka Prehrambena Industrija or give up 7.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.83%
Values	Daily Returns

Podravka Prehrambena Industrij  vs.  Atlantic Grupa dd

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 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.

Atlantic Grupa dd

Risk-Adjusted Performance

1 of 100

Very Weak

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

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

The idea behind Podravka Prehrambena Industrija and Atlantic Grupa 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.