Correlation Between Podravka Prehrambena and Koncar Elektroindustrij

Can any of the company-specific risk be diversified away by investing in both Podravka Prehrambena and Koncar Elektroindustrij 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 Koncar Elektroindustrij 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 Koncar Elektroindustrija dd, you can compare the effects of market volatilities on Podravka Prehrambena and Koncar Elektroindustrij 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 Koncar Elektroindustrij. Check out your portfolio center. Please also check ongoing floating volatility patterns of Podravka Prehrambena and Koncar Elektroindustrij.

Diversification Opportunities for Podravka Prehrambena and Koncar Elektroindustrij

-0.69

Correlation Coefficient

Podravka Prehrambena  Koncar Elektroindustrij

Excellent diversification

The 3 months correlation between Podravka and Koncar is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Podravka Prehrambena Industrij and Koncar Elektroindustrija dd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koncar Elektroindustrij 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 Koncar Elektroindustrij. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koncar Elektroindustrij has no effect on the direction of Podravka Prehrambena i.e., Podravka Prehrambena and Koncar Elektroindustrij go up and down completely randomly.

Pair Corralation between Podravka Prehrambena and Koncar Elektroindustrij

Assuming the 90 days trading horizon Podravka Prehrambena Industrija is expected to under-perform the Koncar Elektroindustrij. But the stock apears to be less risky and, when comparing its historical volatility, Podravka Prehrambena Industrija is 2.15 times less risky than Koncar Elektroindustrij. The stock trades about -0.15 of its potential returns per unit of risk. The Koncar Elektroindustrija dd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  37,000  in Koncar Elektroindustrija dd on September 4, 2024 and sell it today you would earn a total of  3,800  from holding Koncar Elektroindustrija dd or generate 10.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Podravka Prehrambena Industrij  vs.  Koncar Elektroindustrija 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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Koncar Elektroindustrij

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Koncar Elektroindustrija dd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Koncar Elektroindustrij may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Podravka Prehrambena and Koncar Elektroindustrij

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

The idea behind Podravka Prehrambena Industrija and Koncar Elektroindustrija 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..