Correlation Between Embla Medical and Jyske Bank

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

Diversification Opportunities for Embla Medical and Jyske Bank

-0.21

Correlation Coefficient

Embla Medical  Jyske Bank

Very good diversification

The 3 months correlation between Embla and Jyske is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Embla Medical hf and Jyske Bank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jyske Bank AS 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 Jyske Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jyske Bank AS has no effect on the direction of Embla Medical i.e., Embla Medical and Jyske Bank go up and down completely randomly.

Pair Corralation between Embla Medical and Jyske Bank

Assuming the 90 days trading horizon Embla Medical is expected to generate 8.45 times less return on investment than Jyske Bank. In addition to that, Embla Medical is 2.0 times more volatile than Jyske Bank AS. It trades about 0.02 of its total potential returns per unit of risk. Jyske Bank AS is currently generating about 0.3 per unit of volatility. If you would invest  50,900  in Jyske Bank AS on October 25, 2024 and sell it today you would earn a total of  2,700  from holding Jyske Bank AS or generate 5.3% return on investment over 90 days.

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

Embla Medical hf  vs.  Jyske Bank AS

Embla Medical hf

Risk-Adjusted Performance

0 of 100

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 rather sound fundamental indicators, Embla Medical is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Jyske Bank AS

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jyske Bank AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Jyske Bank is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Embla Medical and Jyske Bank

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

The idea behind Embla Medical hf and Jyske Bank AS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.