Correlation Between Fly Play and Icelandic Salmon

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

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

Diversification Opportunities for Fly Play and Icelandic Salmon

-0.83

Correlation Coefficient

Fly Play  Icelandic Salmon

Pay attention - limited upside

The 3 months correlation between Fly and Icelandic is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fly Play hf and Icelandic Salmon AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icelandic Salmon and Fly Play 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 Fly Play hf are associated (or correlated) with Icelandic Salmon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icelandic Salmon has no effect on the direction of Fly Play i.e., Fly Play and Icelandic Salmon go up and down completely randomly.

Pair Corralation between Fly Play and Icelandic Salmon

Assuming the 90 days trading horizon Fly Play hf is expected to under-perform the Icelandic Salmon. In addition to that, Fly Play is 4.14 times more volatile than Icelandic Salmon AS. It trades about -0.08 of its total potential returns per unit of risk. Icelandic Salmon AS is currently generating about 0.08 per unit of volatility. If you would invest  138,000  in Icelandic Salmon AS on September 14, 2024 and sell it today you would earn a total of  10,000  from holding Icelandic Salmon AS or generate 7.25% return on investment over 90 days.

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

Fly Play hf  vs.  Icelandic Salmon AS

Fly Play hf

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Icelandic Salmon

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Icelandic Salmon AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Icelandic Salmon may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fly Play and Icelandic Salmon

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

The idea behind Fly Play hf and Icelandic Salmon AS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..