Correlation Between North Media and Embla Medical
Can any of the company-specific risk be diversified away by investing in both North Media 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 North Media and Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Media AS and Embla Medical hf, you can compare the effects of market volatilities on North Media 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 North Media with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Media and Embla Medical.
Diversification Opportunities for North Media and Embla Medical
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Embla is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding North Media 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 North Media 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 North Media 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 North Media i.e., North Media and Embla Medical go up and down completely randomly.
Pair Corralation between North Media and Embla Medical
Assuming the 90 days trading horizon North Media AS is expected to under-perform the Embla Medical. But the stock apears to be less risky and, when comparing its historical volatility, North Media AS is 1.03 times less risky than Embla Medical. The stock trades about -0.29 of its potential returns per unit of risk. The Embla Medical hf is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,530 in Embla Medical hf on August 30, 2024 and sell it today you would earn a total of 30.00 from holding Embla Medical hf or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Media AS vs. Embla Medical hf
Performance |
| Timeline |
| North Media AS |
| Embla Medical hf |
North Media and Embla Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Media and Embla Medical
The main advantage of trading using opposite North Media and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Media 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.| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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