Correlation Between Arion Banki and Origo Hf

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

Diversification Opportunities for Arion Banki and Origo Hf

0.0

Correlation Coefficient

Arion Banki  Origo Hf

Pay attention - limited upside

The 3 months correlation between Arion and Origo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Origo Hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origo Hf 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 Origo Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origo Hf has no effect on the direction of Arion Banki i.e., Arion Banki and Origo Hf go up and down completely randomly.

Pair Corralation between Arion Banki and Origo Hf

If you would invest  13,625  in Arion banki hf on September 13, 2024 and sell it today you would earn a total of  2,175  from holding Arion banki hf or generate 15.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Arion banki hf  vs.  Origo Hf

Arion banki hf

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arion banki hf are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Arion Banki demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Origo Hf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Origo Hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Origo Hf is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Arion Banki and Origo Hf

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

The idea behind Arion banki hf and Origo Hf 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.