Correlation Between Arion Banki and Paxman AB
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By analyzing existing cross correlation between Arion banki hf and Paxman AB, you can compare the effects of market volatilities on Arion Banki and Paxman AB 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 Arion Banki with a short position of Paxman AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Paxman AB.
Diversification Opportunities for Arion Banki and Paxman AB
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arion and Paxman is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Paxman AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paxman AB and Arion Banki 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 Arion banki hf are associated (or correlated) with Paxman AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paxman AB has no effect on the direction of Arion Banki i.e., Arion Banki and Paxman AB go up and down completely randomly.
Pair Corralation between Arion Banki and Paxman AB
Assuming the 90 days trading horizon Arion Banki is expected to generate 1.8 times less return on investment than Paxman AB. But when comparing it to its historical volatility, Arion banki hf is 1.73 times less risky than Paxman AB. It trades about 0.07 of its potential returns per unit of risk. Paxman AB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,720 in Paxman AB on August 27, 2024 and sell it today you would earn a total of 280.00 from holding Paxman AB or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arion banki hf vs. Paxman AB
Performance |
| Timeline |
| Arion banki hf |
| Paxman AB |
Arion Banki and Paxman AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arion Banki and Paxman AB
The main advantage of trading using opposite Arion Banki and Paxman AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, Paxman AB 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 Paxman AB will offset losses from the drop in Paxman AB's long position.The idea behind Arion banki hf and Paxman AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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