Correlation Between Sminn Hf and Iceland Seafood

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

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

Diversification Opportunities for Sminn Hf and Iceland Seafood

-0.72

Correlation Coefficient

Sminn Hf  Iceland Seafood

Pay attention - limited upside

The 3 months correlation between Sminn and Iceland is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sminn hf and Iceland Seafood International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iceland Seafood Inte 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 Iceland Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iceland Seafood Inte has no effect on the direction of Sminn Hf i.e., Sminn Hf and Iceland Seafood go up and down completely randomly.

Pair Corralation between Sminn Hf and Iceland Seafood

Assuming the 90 days trading horizon Sminn hf is expected to generate 1.05 times more return on investment than Iceland Seafood. However, Sminn Hf is 1.05 times more volatile than Iceland Seafood International. It trades about 0.41 of its potential returns per unit of risk. Iceland Seafood International is currently generating about -0.1 per unit of risk. If you would invest  995.00  in Sminn hf on September 5, 2024 and sell it today you would earn a total of  375.00  from holding Sminn hf or generate 37.69% return on investment over 90 days.

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

Sminn hf  vs.  Iceland Seafood International

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 weak primary indicators, Sminn Hf sustained solid returns over the last few months and may actually be approaching a breakup point.

Iceland Seafood Inte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iceland Seafood International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Sminn Hf and Iceland Seafood

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

The idea behind Sminn hf and Iceland Seafood International 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.