Correlation Between Expat Croatia and Expat Slovenia

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

By analyzing existing cross correlation between Expat Croatia Crobex and Expat Slovenia SBI, you can compare the effects of market volatilities on Expat Croatia and Expat Slovenia 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 Expat Croatia with a short position of Expat Slovenia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Expat Croatia and Expat Slovenia.

Diversification Opportunities for Expat Croatia and Expat Slovenia

0.83

Correlation Coefficient

Expat Croatia  Expat Slovenia

Very poor diversification

The 3 months correlation between Expat and Expat is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Expat Croatia Crobex and Expat Slovenia SBI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expat Slovenia SBI and Expat Croatia 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 Expat Croatia Crobex are associated (or correlated) with Expat Slovenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expat Slovenia SBI has no effect on the direction of Expat Croatia i.e., Expat Croatia and Expat Slovenia go up and down completely randomly.

Pair Corralation between Expat Croatia and Expat Slovenia

Assuming the 90 days trading horizon Expat Croatia Crobex is expected to generate 2.79 times more return on investment than Expat Slovenia. However, Expat Croatia is 2.79 times more volatile than Expat Slovenia SBI. It trades about 0.05 of its potential returns per unit of risk. Expat Slovenia SBI is currently generating about 0.08 per unit of risk. If you would invest  96.00  in Expat Croatia Crobex on September 12, 2024 and sell it today you would earn a total of  4.00  from holding Expat Croatia Crobex or generate 4.17% return on investment over 90 days.

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

Expat Croatia Crobex  vs.  Expat Slovenia SBI

Expat Croatia Crobex

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Expat Croatia Crobex are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Expat Croatia is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Expat Slovenia SBI

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Expat Slovenia SBI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Expat Slovenia is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Expat Croatia and Expat Slovenia

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

The idea behind Expat Croatia Crobex and Expat Slovenia SBI 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.