Correlation Between Arion Banki and Swedencare Publ

Can any of the company-specific risk be diversified away by investing in both Arion Banki and Swedencare Publ 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 Swedencare Publ 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 Swedencare publ AB, you can compare the effects of market volatilities on Arion Banki and Swedencare Publ 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 Swedencare Publ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Swedencare Publ.

Diversification Opportunities for Arion Banki and Swedencare Publ

0.84

Correlation Coefficient

Arion Banki  Swedencare Publ

Very poor diversification

The 3 months correlation between Arion and Swedencare is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Swedencare publ AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedencare publ AB 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 Swedencare Publ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedencare publ AB has no effect on the direction of Arion Banki i.e., Arion Banki and Swedencare Publ go up and down completely randomly.

Pair Corralation between Arion Banki and Swedencare Publ

Assuming the 90 days trading horizon Arion banki hf is expected to generate 0.78 times more return on investment than Swedencare Publ. However, Arion banki hf is 1.29 times less risky than Swedencare Publ. It trades about -0.1 of its potential returns per unit of risk. Swedencare publ AB is currently generating about -0.14 per unit of risk. If you would invest  1,345  in Arion banki hf on December 27, 2024 and sell it today you would lose (155.00) from holding Arion banki hf or give up 11.52% of portfolio value over 90 days.

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

Arion banki hf  vs.  Swedencare publ AB

Arion banki hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arion banki hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Swedencare publ AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swedencare publ AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Arion Banki and Swedencare Publ

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

The idea behind Arion banki hf and Swedencare publ AB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.