Correlation Between Kvika Banki and Sn Hf

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

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

Diversification Opportunities for Kvika Banki and Sn Hf

-0.12

Correlation Coefficient

Kvika Banki  Sn Hf

Good diversification

The 3 months correlation between Kvika and SYN is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kvika banki hf and Sn hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sn hf and Kvika Banki 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 Kvika banki hf are associated (or correlated) with Sn Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sn hf has no effect on the direction of Kvika Banki i.e., Kvika Banki and Sn Hf go up and down completely randomly.

Pair Corralation between Kvika Banki and Sn Hf

Assuming the 90 days trading horizon Kvika banki hf is expected to generate 0.73 times more return on investment than Sn Hf. However, Kvika banki hf is 1.37 times less risky than Sn Hf. It trades about 0.22 of its potential returns per unit of risk. Sn hf is currently generating about 0.06 per unit of risk. If you would invest  1,650  in Kvika banki hf on September 13, 2024 and sell it today you would earn a total of  240.00  from holding Kvika banki hf or generate 14.55% return on investment over 90 days.

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

Kvika banki hf  vs.  Sn hf

Kvika banki hf

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kvika banki hf are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Kvika Banki demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Sn hf

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sn hf are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sn Hf is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kvika Banki and Sn Hf

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

The idea behind Kvika banki hf and Sn 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.