Correlation Between Arion Banki and Spago Nanomedical

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

Diversification Opportunities for Arion Banki and Spago Nanomedical

0.19

Correlation Coefficient

Arion Banki  Spago Nanomedical

Average diversification

The 3 months correlation between Arion and Spago is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Spago Nanomedical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spago Nanomedical 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 Spago Nanomedical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spago Nanomedical has no effect on the direction of Arion Banki i.e., Arion Banki and Spago Nanomedical go up and down completely randomly.

Pair Corralation between Arion Banki and Spago Nanomedical

Assuming the 90 days trading horizon Arion banki hf is expected to under-perform the Spago Nanomedical. But the stock apears to be less risky and, when comparing its historical volatility, Arion banki hf is 2.83 times less risky than Spago Nanomedical. The stock trades about -0.12 of its potential returns per unit of risk. The Spago Nanomedical AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Spago Nanomedical AB on December 24, 2024 and sell it today you would earn a total of  1.00  from holding Spago Nanomedical AB or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Arion banki hf  vs.  Spago Nanomedical 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 weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Spago Nanomedical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Spago Nanomedical AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Spago Nanomedical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arion Banki and Spago Nanomedical

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

The idea behind Arion banki hf and Spago Nanomedical 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..