Correlation Between AD Plastik and Dalekovod
Can any of the company-specific risk be diversified away by investing in both AD Plastik and Dalekovod 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 AD Plastik and Dalekovod into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AD Plastik dd and Dalekovod dd, you can compare the effects of market volatilities on AD Plastik and Dalekovod 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 AD Plastik with a short position of Dalekovod. Check out your portfolio center. Please also check ongoing floating volatility patterns of AD Plastik and Dalekovod.
Diversification Opportunities for AD Plastik and Dalekovod
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ADPL and Dalekovod is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding AD Plastik dd and Dalekovod dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalekovod dd and AD Plastik 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 AD Plastik dd are associated (or correlated) with Dalekovod. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalekovod dd has no effect on the direction of AD Plastik i.e., AD Plastik and Dalekovod go up and down completely randomly.
Pair Corralation between AD Plastik and Dalekovod
Assuming the 90 days trading horizon AD Plastik dd is expected to generate 1.09 times more return on investment than Dalekovod. However, AD Plastik is 1.09 times more volatile than Dalekovod dd. It trades about -0.22 of its potential returns per unit of risk. Dalekovod dd is currently generating about -0.27 per unit of risk. If you would invest 1,080 in AD Plastik dd on September 13, 2024 and sell it today you would lose (86.00) from holding AD Plastik dd or give up 7.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
AD Plastik dd vs. Dalekovod dd
Performance |
| Timeline |
| AD Plastik dd |
| Dalekovod dd |
AD Plastik and Dalekovod Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AD Plastik and Dalekovod
The main advantage of trading using opposite AD Plastik and Dalekovod positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AD Plastik position performs unexpectedly, Dalekovod 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 Dalekovod will offset losses from the drop in Dalekovod's long position.| AD Plastik vs. Hrvatska Postanska Banka | AD Plastik vs. Dalekovod dd | AD Plastik vs. Podravka Prehrambena Industrija | AD Plastik vs. Adris Grupa dd |
| Dalekovod vs. AD Plastik dd | Dalekovod vs. Hrvatska Postanska Banka | Dalekovod vs. Podravka Prehrambena Industrija | Dalekovod vs. Adris Grupa dd |
Check out your portfolio center.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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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