Correlation Between Alefarm Brewing and Embla Medical
Can any of the company-specific risk be diversified away by investing in both Alefarm Brewing 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 Alefarm Brewing and Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alefarm Brewing AS and Embla Medical hf, you can compare the effects of market volatilities on Alefarm Brewing 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 Alefarm Brewing with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alefarm Brewing and Embla Medical.
Diversification Opportunities for Alefarm Brewing and Embla Medical
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alefarm and Embla is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Alefarm Brewing AS 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 Alefarm Brewing 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 Alefarm Brewing AS 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 Alefarm Brewing i.e., Alefarm Brewing and Embla Medical go up and down completely randomly.
Pair Corralation between Alefarm Brewing and Embla Medical
Assuming the 90 days trading horizon Alefarm Brewing AS is expected to generate 2.0 times more return on investment than Embla Medical. However, Alefarm Brewing is 2.0 times more volatile than Embla Medical hf. It trades about 0.08 of its potential returns per unit of risk. Embla Medical hf is currently generating about -0.15 per unit of risk. If you would invest 131.00 in Alefarm Brewing AS on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Alefarm Brewing AS or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alefarm Brewing AS vs. Embla Medical hf
Performance |
| Timeline |
| Alefarm Brewing AS |
| Embla Medical hf |
Alefarm Brewing and Embla Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alefarm Brewing and Embla Medical
The main advantage of trading using opposite Alefarm Brewing and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alefarm Brewing 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.| Alefarm Brewing vs. North Media AS | Alefarm Brewing vs. Carnegie Wealth Management | Alefarm Brewing vs. Nordfyns Bank AS | Alefarm Brewing vs. Kreditbanken AS |
| Embla Medical vs. Kreditbanken AS | Embla Medical vs. Skjern Bank AS | Embla Medical vs. Nordfyns Bank AS | Embla Medical vs. Prime Office AS |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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