Correlation Between Embla Medical and Ringkjoebing Landbobank
Can any of the company-specific risk be diversified away by investing in both Embla Medical and Ringkjoebing Landbobank 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 Embla Medical and Ringkjoebing Landbobank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embla Medical hf and Ringkjoebing Landbobank AS, you can compare the effects of market volatilities on Embla Medical and Ringkjoebing Landbobank 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 Embla Medical with a short position of Ringkjoebing Landbobank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embla Medical and Ringkjoebing Landbobank.
Diversification Opportunities for Embla Medical and Ringkjoebing Landbobank
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Embla and Ringkjoebing is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Embla Medical hf and Ringkjoebing Landbobank AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ringkjoebing Landbobank and Embla Medical 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 Embla Medical hf are associated (or correlated) with Ringkjoebing Landbobank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ringkjoebing Landbobank has no effect on the direction of Embla Medical i.e., Embla Medical and Ringkjoebing Landbobank go up and down completely randomly.
Pair Corralation between Embla Medical and Ringkjoebing Landbobank
Assuming the 90 days trading horizon Embla Medical hf is expected to under-perform the Ringkjoebing Landbobank. In addition to that, Embla Medical is 1.22 times more volatile than Ringkjoebing Landbobank AS. It trades about -0.03 of its total potential returns per unit of risk. Ringkjoebing Landbobank AS is currently generating about 0.08 per unit of volatility. If you would invest 116,000 in Ringkjoebing Landbobank AS on September 19, 2024 and sell it today you would earn a total of 2,300 from holding Ringkjoebing Landbobank AS or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embla Medical hf vs. Ringkjoebing Landbobank AS
Performance |
| Timeline |
| Embla Medical hf |
| Ringkjoebing Landbobank |
Embla Medical and Ringkjoebing Landbobank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embla Medical and Ringkjoebing Landbobank
The main advantage of trading using opposite Embla Medical and Ringkjoebing Landbobank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embla Medical position performs unexpectedly, Ringkjoebing Landbobank 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 Ringkjoebing Landbobank will offset losses from the drop in Ringkjoebing Landbobank's long position.| Embla Medical vs. Novo Nordisk AS | Embla Medical vs. Nordea Bank Abp | Embla Medical vs. DSV Panalpina AS | Embla Medical vs. AP Mller |
| Ringkjoebing Landbobank vs. FLSmidth Co | Ringkjoebing Landbobank vs. Danske Bank AS | Ringkjoebing Landbobank vs. ISS AS | Ringkjoebing Landbobank vs. DSV Panalpina 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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