Correlation Between Laan Spar and Embla Medical

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

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

Diversification Opportunities for Laan Spar and Embla Medical

-0.83

Correlation Coefficient

Laan Spar  Embla Medical

Pay attention - limited upside

The 3 months correlation between Laan and Embla is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Laan Spar Bank 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 Laan Spar 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 Laan Spar Bank 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 Laan Spar i.e., Laan Spar and Embla Medical go up and down completely randomly.

Pair Corralation between Laan Spar and Embla Medical

Assuming the 90 days trading horizon Laan Spar Bank is expected to generate 0.6 times more return on investment than Embla Medical. However, Laan Spar Bank is 1.67 times less risky than Embla Medical. It trades about 0.2 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.2 per unit of risk. If you would invest  69,000  in Laan Spar Bank on December 30, 2024 and sell it today you would earn a total of  10,500  from holding Laan Spar Bank or generate 15.22% return on investment over 90 days.

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

Laan Spar Bank  vs.  Embla Medical hf

Laan Spar Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Laan Spar Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Laan Spar displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Laan Spar and Embla Medical

The main advantage of trading using opposite Laan Spar and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laan Spar 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 Laan Spar Bank 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.