Correlation Between Marel Hf and Hampidjan

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

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

Diversification Opportunities for Marel Hf and Hampidjan

-0.29

Correlation Coefficient

Marel Hf  Hampidjan

Very good diversification

The 3 months correlation between Marel and Hampidjan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Marel hf and Hampidjan hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampidjan hf and Marel 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 Marel hf are associated (or correlated) with Hampidjan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampidjan hf has no effect on the direction of Marel Hf i.e., Marel Hf and Hampidjan go up and down completely randomly.

Pair Corralation between Marel Hf and Hampidjan

Assuming the 90 days trading horizon Marel hf is expected to generate 1.06 times more return on investment than Hampidjan. However, Marel Hf is 1.06 times more volatile than Hampidjan hf. It trades about 0.3 of its potential returns per unit of risk. Hampidjan hf is currently generating about -0.03 per unit of risk. If you would invest  49,400  in Marel hf on September 13, 2024 and sell it today you would earn a total of  13,400  from holding Marel hf or generate 27.13% return on investment over 90 days.

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

Marel hf  vs.  Hampidjan hf

Marel hf

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marel hf are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Marel Hf demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hampidjan hf

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marel Hf and Hampidjan

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

The idea behind Marel hf and Hampidjan 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.