Correlation Between Slandsbanki and Iceland Seafood

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

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

Diversification Opportunities for Slandsbanki and Iceland Seafood

0.16

Correlation Coefficient

Slandsbanki  Iceland Seafood

Average diversification

The 3 months correlation between Slandsbanki and Iceland is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding slandsbanki hf and Iceland Seafood International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iceland Seafood Inte and Slandsbanki 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 slandsbanki hf are associated (or correlated) with Iceland Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iceland Seafood Inte has no effect on the direction of Slandsbanki i.e., Slandsbanki and Iceland Seafood go up and down completely randomly.

Pair Corralation between Slandsbanki and Iceland Seafood

Assuming the 90 days trading horizon slandsbanki hf is expected to under-perform the Iceland Seafood. But the stock apears to be less risky and, when comparing its historical volatility, slandsbanki hf is 1.24 times less risky than Iceland Seafood. The stock trades about -0.05 of its potential returns per unit of risk. The Iceland Seafood International is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Iceland Seafood International on December 4, 2024 and sell it today you would earn a total of  73.00  from holding Iceland Seafood International or generate 15.8% return on investment over 90 days.

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

slandsbanki hf  vs.  Iceland Seafood International

slandsbanki hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days slandsbanki hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Slandsbanki is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Iceland Seafood Inte

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iceland Seafood International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Iceland Seafood sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Slandsbanki and Iceland Seafood

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

The idea behind slandsbanki hf and Iceland Seafood International 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.