Correlation Between Scandinavian Investment and Embla Medical

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

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

Diversification Opportunities for Scandinavian Investment and Embla Medical

0.15

Correlation Coefficient

Scandinavian Investment  Embla Medical

Average diversification

The 3 months correlation between Scandinavian and Embla is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Investment Group 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 Scandinavian Investment 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 Scandinavian Investment Group 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 Scandinavian Investment i.e., Scandinavian Investment and Embla Medical go up and down completely randomly.

Pair Corralation between Scandinavian Investment and Embla Medical

Assuming the 90 days trading horizon Scandinavian Investment Group is expected to generate 1.31 times more return on investment than Embla Medical. However, Scandinavian Investment is 1.31 times more volatile than Embla Medical hf. It trades about -0.04 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.12 per unit of risk. If you would invest  326.00  in Scandinavian Investment Group on October 11, 2024 and sell it today you would lose (8.00) from holding Scandinavian Investment Group or give up 2.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Scandinavian Investment Group  vs.  Embla Medical hf

Scandinavian Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Investment Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Scandinavian Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Embla Medical hf

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embla Medical hf are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Embla Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Scandinavian Investment and Embla Medical

The main advantage of trading using opposite Scandinavian Investment and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Investment 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 Scandinavian Investment Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.