Correlation Between TROPHY GAMES and Embla Medical

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

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

Diversification Opportunities for TROPHY GAMES and Embla Medical

0.0

Correlation Coefficient

TROPHY GAMES  Embla Medical

Pay attention - limited upside

The 3 months correlation between TROPHY and Embla is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TROPHY GAMES Development 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 TROPHY GAMES 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 TROPHY GAMES Development 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 TROPHY GAMES i.e., TROPHY GAMES and Embla Medical go up and down completely randomly.

Pair Corralation between TROPHY GAMES and Embla Medical

Assuming the 90 days trading horizon TROPHY GAMES Development is expected to generate 1.84 times more return on investment than Embla Medical. However, TROPHY GAMES is 1.84 times more volatile than Embla Medical hf. It trades about -0.02 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.05 per unit of risk. If you would invest  740.00  in TROPHY GAMES Development on December 2, 2024 and sell it today you would lose (60.00) from holding TROPHY GAMES Development or give up 8.11% of portfolio value over 90 days.

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

TROPHY GAMES Development  vs.  Embla Medical hf

TROPHY GAMES Development

Risk-Adjusted Performance

Very Weak

Over the last 90 days TROPHY GAMES Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, TROPHY GAMES is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Embla Medical hf

Risk-Adjusted Performance

Very Weak

Over the last 90 days Embla Medical hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Embla Medical is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TROPHY GAMES and Embla Medical

The main advantage of trading using opposite TROPHY GAMES and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TROPHY GAMES 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 TROPHY GAMES Development 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.