Correlation Between Solid Clouds and Iceland Seafood

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

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

Diversification Opportunities for Solid Clouds and Iceland Seafood

-0.33

Correlation Coefficient

Solid Clouds  Iceland Seafood

Very good diversification

The 3 months correlation between Solid and Iceland is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Solid Clouds 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 Solid Clouds 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 Solid Clouds 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 Solid Clouds i.e., Solid Clouds and Iceland Seafood go up and down completely randomly.

Pair Corralation between Solid Clouds and Iceland Seafood

Assuming the 90 days trading horizon Solid Clouds hf is expected to generate 19.74 times more return on investment than Iceland Seafood. However, Solid Clouds is 19.74 times more volatile than Iceland Seafood International. It trades about 0.1 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  206.00  in Solid Clouds hf on September 5, 2024 and sell it today you would earn a total of  4.00  from holding Solid Clouds hf or generate 1.94% return on investment over 90 days.

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

Solid Clouds hf  vs.  Iceland Seafood International

Solid Clouds hf

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solid Clouds hf are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward indicators, Solid Clouds demonstrated 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 Solid Clouds and Iceland Seafood

The main advantage of trading using opposite Solid Clouds and Iceland Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solid Clouds 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 Solid Clouds 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.