Correlation Between Sminn Hf and Hagar Hf

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

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

Diversification Opportunities for Sminn Hf and Hagar Hf

0.94

Correlation Coefficient

Sminn Hf  Hagar Hf

Almost no diversification

The 3 months correlation between Sminn and Hagar is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sminn hf and Hagar hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hagar hf and Sminn 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 Sminn hf are associated (or correlated) with Hagar Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hagar hf has no effect on the direction of Sminn Hf i.e., Sminn Hf and Hagar Hf go up and down completely randomly.

Pair Corralation between Sminn Hf and Hagar Hf

Assuming the 90 days trading horizon Sminn hf is expected to generate 0.85 times more return on investment than Hagar Hf. However, Sminn hf is 1.18 times less risky than Hagar Hf. It trades about 0.41 of its potential returns per unit of risk. Hagar hf is currently generating about 0.24 per unit of risk. If you would invest  990.00  in Sminn hf on September 13, 2024 and sell it today you would earn a total of  385.00  from holding Sminn hf or generate 38.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Sminn hf  vs.  Hagar hf

Sminn hf

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sminn hf are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Sminn Hf sustained solid returns over the last few months and may actually be approaching a breakup point.

Hagar hf

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hagar hf are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Hagar Hf exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sminn Hf and Hagar Hf

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

The idea behind Sminn hf and Hagar 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.