Correlation Between Arion Banki and Nitro Games

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

By analyzing existing cross correlation between Arion banki hf and Nitro Games Oyj, you can compare the effects of market volatilities on Arion Banki and Nitro Games 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 Arion Banki with a short position of Nitro Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Nitro Games.

Diversification Opportunities for Arion Banki and Nitro Games

-0.18

Correlation Coefficient

Arion Banki  Nitro Games

Good diversification

The 3 months correlation between Arion and Nitro is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Nitro Games Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitro Games Oyj and Arion Banki 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 Arion banki hf are associated (or correlated) with Nitro Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitro Games Oyj has no effect on the direction of Arion Banki i.e., Arion Banki and Nitro Games go up and down completely randomly.

Pair Corralation between Arion Banki and Nitro Games

Assuming the 90 days trading horizon Arion Banki is expected to generate 64.78 times less return on investment than Nitro Games. But when comparing it to its historical volatility, Arion banki hf is 2.8 times less risky than Nitro Games. It trades about 0.01 of its potential returns per unit of risk. Nitro Games Oyj is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  238.00  in Nitro Games Oyj on September 1, 2024 and sell it today you would earn a total of  28.00  from holding Nitro Games Oyj or generate 11.76% return on investment over 90 days.

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

Arion banki hf  vs.  Nitro Games Oyj

Arion banki hf

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arion banki hf are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arion Banki unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nitro Games Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nitro Games Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nitro Games is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arion Banki and Nitro Games

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

The idea behind Arion banki hf and Nitro Games Oyj 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.