Correlation Between Lollands Bank and Embla Medical
Can any of the company-specific risk be diversified away by investing in both Lollands Bank 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 Lollands Bank and Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lollands Bank and Embla Medical hf, you can compare the effects of market volatilities on Lollands Bank 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 Lollands Bank with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lollands Bank and Embla Medical.
Diversification Opportunities for Lollands Bank and Embla Medical
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lollands and Embla is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lollands Bank 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 Lollands Bank 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 Lollands Bank 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 Lollands Bank i.e., Lollands Bank and Embla Medical go up and down completely randomly.
Pair Corralation between Lollands Bank and Embla Medical
Assuming the 90 days trading horizon Lollands Bank is expected to under-perform the Embla Medical. In addition to that, Lollands Bank is 1.19 times more volatile than Embla Medical hf. It trades about -0.02 of its total potential returns per unit of risk. Embla Medical hf is currently generating about 0.07 per unit of volatility. If you would invest 3,430 in Embla Medical hf on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Embla Medical hf or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lollands Bank vs. Embla Medical hf
Performance |
| Timeline |
| Lollands Bank |
| Embla Medical hf |
Lollands Bank and Embla Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lollands Bank and Embla Medical
The main advantage of trading using opposite Lollands Bank and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lollands Bank 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.| Lollands Bank vs. Sydbank AS | Lollands Bank vs. Jyske Bank AS | Lollands Bank vs. Alm Brand | Lollands Bank vs. Nordea Bank Abp |
| Embla Medical vs. Novo Nordisk AS | Embla Medical vs. Nordea Bank Abp | Embla Medical vs. DSV Panalpina AS | Embla Medical vs. AP Mller |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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