Correlation Between BankInvest Value and Embla Medical

Can any of the company-specific risk be diversified away by investing in both BankInvest Value and Embla Medical 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 BankInvest Value and Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BankInvest Value Globale and Embla Medical hf, you can compare the effects of market volatilities on BankInvest Value and Embla Medical 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 BankInvest Value with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankInvest Value and Embla Medical.

Diversification Opportunities for BankInvest Value and Embla Medical

0.48

Correlation Coefficient

BankInvest Value  Embla Medical

Very weak diversification

The 3 months correlation between BankInvest and Embla is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding BankInvest Value Globale and Embla Medical hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embla Medical hf and BankInvest Value 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 BankInvest Value Globale are associated (or correlated) with Embla Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embla Medical hf has no effect on the direction of BankInvest Value i.e., BankInvest Value and Embla Medical go up and down completely randomly.

Pair Corralation between BankInvest Value and Embla Medical

Assuming the 90 days trading horizon BankInvest Value Globale is expected to generate 1.13 times more return on investment than Embla Medical. However, BankInvest Value is 1.13 times more volatile than Embla Medical hf. It trades about -0.14 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.2 per unit of risk. If you would invest  10,510  in BankInvest Value Globale on December 30, 2024 and sell it today you would lose (1,866) from holding BankInvest Value Globale or give up 17.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.63%
Values	Daily Returns

BankInvest Value Globale  vs.  Embla Medical hf

BankInvest Value Globale

Risk-Adjusted Performance

Very Weak

Over the last 90 days BankInvest Value Globale has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic 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.

Embla Medical hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embla Medical hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with BankInvest Value and Embla Medical

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

The idea behind BankInvest Value Globale and Embla Medical 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.