Correlation Between Fundamental Invest and Embla Medical

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

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

Diversification Opportunities for Fundamental Invest and Embla Medical

0.8

Correlation Coefficient

Fundamental Invest  Embla Medical

Very poor diversification

The 3 months correlation between Fundamental and Embla is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fundamental Invest Stock 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 Fundamental Invest 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 Fundamental Invest Stock 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 Fundamental Invest i.e., Fundamental Invest and Embla Medical go up and down completely randomly.

Pair Corralation between Fundamental Invest and Embla Medical

Assuming the 90 days trading horizon Fundamental Invest Stock is expected to generate 0.97 times more return on investment than Embla Medical. However, Fundamental Invest Stock is 1.04 times less risky than Embla Medical. It trades about -0.12 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.16 per unit of risk. If you would invest  18,940  in Fundamental Invest Stock on December 25, 2024 and sell it today you would lose (2,505) from holding Fundamental Invest Stock or give up 13.23% of portfolio value over 90 days.

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

Fundamental Invest Stock  vs.  Embla Medical hf

Fundamental Invest Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fundamental Invest Stock 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.

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 Fundamental Invest and Embla Medical

The main advantage of trading using opposite Fundamental Invest and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fundamental Invest 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 Fundamental Invest Stock 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.

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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.