Correlation Between Lgerin Egill and Fly Play

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

By analyzing existing cross correlation between lgerin Egill Skallagrmsson and Fly Play hf, you can compare the effects of market volatilities on Lgerin Egill and Fly Play 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 Lgerin Egill with a short position of Fly Play. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgerin Egill and Fly Play.

Diversification Opportunities for Lgerin Egill and Fly Play

0.59

Correlation Coefficient

Lgerin Egill  Fly Play

Very weak diversification

The 3 months correlation between Lgerin and Fly is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding lgerin Egill Skallagrmsson and Fly Play hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fly Play hf and Lgerin Egill 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 lgerin Egill Skallagrmsson are associated (or correlated) with Fly Play. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fly Play hf has no effect on the direction of Lgerin Egill i.e., Lgerin Egill and Fly Play go up and down completely randomly.

Pair Corralation between Lgerin Egill and Fly Play

Assuming the 90 days trading horizon lgerin Egill Skallagrmsson is expected to generate 0.32 times more return on investment than Fly Play. However, lgerin Egill Skallagrmsson is 3.15 times less risky than Fly Play. It trades about -0.01 of its potential returns per unit of risk. Fly Play hf is currently generating about -0.08 per unit of risk. If you would invest  1,870  in lgerin Egill Skallagrmsson on December 29, 2024 and sell it today you would lose (20.00) from holding lgerin Egill Skallagrmsson or give up 1.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

lgerin Egill Skallagrmsson  vs.  Fly Play hf

lgerin Egill Skallag

Risk-Adjusted Performance

Very Weak

Over the last 90 days lgerin Egill Skallagrmsson has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Lgerin Egill is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fly Play hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fly Play hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Lgerin Egill and Fly Play

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

The idea behind lgerin Egill Skallagrmsson and Fly Play 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.