Correlation Between Hagar Hf and Sminn Hf

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

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

Diversification Opportunities for Hagar Hf and Sminn Hf

0.94

Correlation Coefficient

Hagar Hf  Sminn Hf

Almost no diversification

The 3 months correlation between Hagar and Sminn is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hagar hf and Sminn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sminn hf and Hagar Hf 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 Hagar hf are associated (or correlated) with Sminn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sminn hf has no effect on the direction of Hagar Hf i.e., Hagar Hf and Sminn Hf go up and down completely randomly.

Pair Corralation between Hagar Hf and Sminn Hf

Assuming the 90 days trading horizon Hagar Hf is expected to generate 2.49 times less return on investment than Sminn Hf. But when comparing it to its historical volatility, Hagar hf is 1.11 times less risky than Sminn Hf. It trades about 0.26 of its potential returns per unit of risk. Sminn hf is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  1,150  in Sminn hf on September 5, 2024 and sell it today you would earn a total of  220.00  from holding Sminn hf or generate 19.13% return on investment over 90 days.

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

Hagar hf  vs.  Sminn hf

Hagar hf

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hagar hf are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Hagar Hf exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sminn hf

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sminn hf are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Sminn Hf sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hagar Hf and Sminn Hf

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

The idea behind Hagar hf and Sminn 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.