Correlation Between Dino Polska and Tatry Mountain

Can any of the company-specific risk be diversified away by investing in both Dino Polska and Tatry Mountain 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 Tatry Mountain 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 Tatry Mountain, you can compare the effects of market volatilities on Dino Polska and Tatry Mountain 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 Tatry Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dino Polska and Tatry Mountain.

Diversification Opportunities for Dino Polska and Tatry Mountain

0.64

Correlation Coefficient

Dino Polska  Tatry Mountain

Poor diversification

The 3 months correlation between Dino and Tatry is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dino Polska SA and Tatry Mountain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatry Mountain 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 Tatry Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatry Mountain has no effect on the direction of Dino Polska i.e., Dino Polska and Tatry Mountain go up and down completely randomly.

Pair Corralation between Dino Polska and Tatry Mountain

Assuming the 90 days trading horizon Dino Polska SA is expected to generate 2.3 times more return on investment than Tatry Mountain. However, Dino Polska is 2.3 times more volatile than Tatry Mountain. It trades about 0.17 of its potential returns per unit of risk. Tatry Mountain is currently generating about 0.15 per unit of risk. If you would invest  30,330  in Dino Polska SA on September 15, 2024 and sell it today you would earn a total of  10,110  from holding Dino Polska SA or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dino Polska SA  vs.  Tatry Mountain

Dino Polska SA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dino Polska SA are ranked lower than 13 (%) 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.

Tatry Mountain

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tatry Mountain are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tatry Mountain may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dino Polska and Tatry Mountain

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

The idea behind Dino Polska SA and Tatry Mountain 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.