Correlation Between Sminn Hf and Lgerin Egill

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

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

Diversification Opportunities for Sminn Hf and Lgerin Egill

0.55

Correlation Coefficient

Sminn Hf  Lgerin Egill

Very weak diversification

The 3 months correlation between Sminn and Lgerin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sminn hf and lgerin Egill Skallagrmsson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on lgerin Egill Skallag 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 Lgerin Egill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of lgerin Egill Skallag has no effect on the direction of Sminn Hf i.e., Sminn Hf and Lgerin Egill go up and down completely randomly.

Pair Corralation between Sminn Hf and Lgerin Egill

Assuming the 90 days trading horizon Sminn hf is expected to generate 0.8 times more return on investment than Lgerin Egill. However, Sminn hf is 1.25 times less risky than Lgerin Egill. It trades about 0.41 of its potential returns per unit of risk. lgerin Egill Skallagrmsson is currently generating about 0.02 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 Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Sminn hf  vs.  lgerin Egill Skallagrmsson

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.

lgerin Egill Skallag

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in lgerin Egill Skallagrmsson are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Sminn Hf and Lgerin Egill

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

The idea behind Sminn hf and lgerin Egill Skallagrmsson 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.