Correlation Between AstraZeneca PLC and Arion Banki

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Can any of the company-specific risk be diversified away by investing in both AstraZeneca PLC and Arion Banki 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 AstraZeneca PLC and Arion Banki into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AstraZeneca PLC and Arion banki hf, you can compare the effects of market volatilities on AstraZeneca PLC and Arion Banki 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 AstraZeneca PLC with a short position of Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of AstraZeneca PLC and Arion Banki.

Diversification Opportunities for AstraZeneca PLC and Arion Banki

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between AstraZeneca and Arion is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding AstraZeneca PLC and Arion banki hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arion banki hf and AstraZeneca PLC 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 AstraZeneca PLC are associated (or correlated) with Arion Banki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arion banki hf has no effect on the direction of AstraZeneca PLC i.e., AstraZeneca PLC and Arion Banki go up and down completely randomly.

Pair Corralation between AstraZeneca PLC and Arion Banki

Assuming the 90 days trading horizon AstraZeneca PLC is expected to under-perform the Arion Banki. But the stock apears to be less risky and, when comparing its historical volatility, AstraZeneca PLC is 1.12 times less risky than Arion Banki. The stock trades about -0.18 of its potential returns per unit of risk. The Arion banki hf is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,040  in Arion banki hf on September 1, 2024 and sell it today you would earn a total of  200.00  from holding Arion banki hf or generate 19.23% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy98.48%
ValuesDaily Returns

AstraZeneca PLC  vs.  Arion banki hf

 Performance 
       Timeline  
AstraZeneca PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AstraZeneca PLC 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 December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Arion banki hf 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
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.

AstraZeneca PLC and Arion Banki Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AstraZeneca PLC and Arion Banki

The main advantage of trading using opposite AstraZeneca PLC and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AstraZeneca PLC position performs unexpectedly, Arion Banki 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 Arion Banki will offset losses from the drop in Arion Banki's long position.
The idea behind AstraZeneca PLC and Arion banki 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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