Correlation Between Flying Nickel and Arion Banki

Can any of the company-specific risk be diversified away by investing in both Flying Nickel 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 Flying Nickel and Arion Banki into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Flying Nickel Mining and Arion banki hf, you can compare the effects of market volatilities on Flying Nickel 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 Flying Nickel with a short position of Arion Banki. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flying Nickel and Arion Banki.

Diversification Opportunities for Flying Nickel and Arion Banki

-0.47

Correlation Coefficient

Flying Nickel  Arion Banki

Very good diversification

The 3 months correlation between Flying and Arion is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Flying Nickel Mining 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 Flying Nickel 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 Flying Nickel Mining 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 Flying Nickel i.e., Flying Nickel and Arion Banki go up and down completely randomly.

Pair Corralation between Flying Nickel and Arion Banki

Assuming the 90 days trading horizon Flying Nickel Mining is expected to under-perform the Arion Banki. In addition to that, Flying Nickel is 6.74 times more volatile than Arion banki hf. It trades about -0.2 of its total potential returns per unit of risk. Arion banki hf is currently generating about 0.61 per unit of volatility. If you would invest  15,700  in Arion banki hf on October 7, 2024 and sell it today you would earn a total of  1,300  from holding Arion banki hf or generate 8.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.47%
Values	Daily Returns

Flying Nickel Mining  vs.  Arion banki hf

Flying Nickel Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flying Nickel Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Flying Nickel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Arion banki hf

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arion banki hf are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Arion Banki may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Flying Nickel and Arion Banki

The main advantage of trading using opposite Flying Nickel and Arion Banki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flying Nickel 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 Flying Nickel Mining 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.