Correlation Between Embla Medical and IA Invest

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

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

Diversification Opportunities for Embla Medical and IA Invest

0.44

Correlation Coefficient

Embla Medical  IA Invest

Very weak diversification

The 3 months correlation between Embla and IAIACVF is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Embla Medical hf and IA Invest Advice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IA Invest Advice and Embla Medical 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 Embla Medical hf are associated (or correlated) with IA Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IA Invest Advice has no effect on the direction of Embla Medical i.e., Embla Medical and IA Invest go up and down completely randomly.

Pair Corralation between Embla Medical and IA Invest

Assuming the 90 days trading horizon Embla Medical hf is expected to under-perform the IA Invest. In addition to that, Embla Medical is 2.11 times more volatile than IA Invest Advice. It trades about -0.15 of its total potential returns per unit of risk. IA Invest Advice is currently generating about -0.04 per unit of volatility. If you would invest  13,860  in IA Invest Advice on December 24, 2024 and sell it today you would lose (353.00) from holding IA Invest Advice or give up 2.55% of portfolio value over 90 days.

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

Embla Medical hf  vs.  IA Invest Advice

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.

IA Invest Advice

Risk-Adjusted Performance

Very Weak

Over the last 90 days IA Invest Advice has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IA Invest is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Embla Medical and IA Invest

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

The idea behind Embla Medical hf and IA Invest Advice 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.