Correlation Between Icelandic Salmon and Festi Hf
Can any of the company-specific risk be diversified away by investing in both Icelandic Salmon and Festi Hf 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 Icelandic Salmon and Festi Hf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Icelandic Salmon AS and Festi hf, you can compare the effects of market volatilities on Icelandic Salmon and Festi Hf 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 Icelandic Salmon with a short position of Festi Hf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icelandic Salmon and Festi Hf.
Diversification Opportunities for Icelandic Salmon and Festi Hf
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Icelandic and Festi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Icelandic Salmon AS and Festi hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Festi hf and Icelandic Salmon 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 Icelandic Salmon AS are associated (or correlated) with Festi Hf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Festi hf has no effect on the direction of Icelandic Salmon i.e., Icelandic Salmon and Festi Hf go up and down completely randomly.
Pair Corralation between Icelandic Salmon and Festi Hf
Assuming the 90 days trading horizon Icelandic Salmon AS is expected to under-perform the Festi Hf. But the stock apears to be less risky and, when comparing its historical volatility, Icelandic Salmon AS is 1.94 times less risky than Festi Hf. The stock trades about -0.13 of its potential returns per unit of risk. The Festi hf is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 23,200 in Festi hf on August 25, 2024 and sell it today you would earn a total of 4,800 from holding Festi hf or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Icelandic Salmon AS vs. Festi hf
Performance |
| Timeline |
| Icelandic Salmon |
| Festi hf |
Icelandic Salmon and Festi Hf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Icelandic Salmon and Festi Hf
The main advantage of trading using opposite Icelandic Salmon and Festi Hf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icelandic Salmon position performs unexpectedly, Festi Hf 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 Festi Hf will offset losses from the drop in Festi Hf's long position.| Icelandic Salmon vs. Arion banki hf | Icelandic Salmon vs. slandsbanki hf | Icelandic Salmon vs. Kvika banki hf | Icelandic Salmon vs. Alvotech |
| Festi Hf vs. Iceland Seafood International | Festi Hf vs. Kvika banki hf | Festi Hf vs. Icelandair Group hf | Festi Hf vs. Alvotech |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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