Correlation Between Flying Nickel and Marel Hf

Can any of the company-specific risk be diversified away by investing in both Flying Nickel and Marel Hf 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 Marel Hf 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 Marel hf, you can compare the effects of market volatilities on Flying Nickel and Marel Hf 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 Marel Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flying Nickel and Marel Hf.

Diversification Opportunities for Flying Nickel and Marel Hf

-0.28

Correlation Coefficient

Flying Nickel  Marel Hf

Very good diversification

The 3 months correlation between Flying and Marel is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Flying Nickel Mining and Marel hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marel 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 Marel Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marel hf has no effect on the direction of Flying Nickel i.e., Flying Nickel and Marel Hf go up and down completely randomly.

Pair Corralation between Flying Nickel and Marel Hf

Assuming the 90 days trading horizon Flying Nickel Mining is expected to under-perform the Marel Hf. In addition to that, Flying Nickel is 1.76 times more volatile than Marel hf. It trades about -0.2 of its total potential returns per unit of risk. Marel hf is currently generating about -0.02 per unit of volatility. If you would invest  62,000  in Marel hf on October 7, 2024 and sell it today you would lose (1,000.00) from holding Marel hf or give up 1.61% of portfolio value over 90 days.

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

Flying Nickel Mining  vs.  Marel 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.

Marel hf

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marel hf are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Marel Hf demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flying Nickel and Marel Hf

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

The idea behind Flying Nickel Mining and Marel 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.