Correlation Between Dino Polska and ADX

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

By analyzing existing cross correlation between Dino Polska SA and ADX, you can compare the effects of market volatilities on Dino Polska and ADX 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 Dino Polska with a short position of ADX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dino Polska and ADX.

Diversification Opportunities for Dino Polska and ADX

-0.35

Correlation Coefficient

Dino Polska  ADX

Very good diversification

The 3 months correlation between Dino and ADX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dino Polska SA and ADX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADX and Dino Polska 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 Dino Polska SA are associated (or correlated) with ADX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADX has no effect on the direction of Dino Polska i.e., Dino Polska and ADX go up and down completely randomly.

Pair Corralation between Dino Polska and ADX

Assuming the 90 days trading horizon Dino Polska is expected to generate 4.57 times less return on investment than ADX. But when comparing it to its historical volatility, Dino Polska SA is 2.91 times less risky than ADX. It trades about 0.02 of its potential returns per unit of risk. ADX is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  32.00  in ADX on September 28, 2024 and sell it today you would lose (2.00) from holding ADX or give up 6.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.66%
Values	Daily Returns

Dino Polska SA  vs.  ADX

Dino Polska SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dino Polska SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Dino Polska reported solid returns over the last few months and may actually be approaching a breakup point.

ADX

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADX are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, ADX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dino Polska and ADX

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

The idea behind Dino Polska SA and ADX 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.