Correlation Between Lgerin Egill and Hampidjan
Can any of the company-specific risk be diversified away by investing in both Lgerin Egill and Hampidjan 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 Lgerin Egill and Hampidjan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between lgerin Egill Skallagrmsson and Hampidjan hf, you can compare the effects of market volatilities on Lgerin Egill and Hampidjan 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 Lgerin Egill with a short position of Hampidjan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lgerin Egill and Hampidjan.
Diversification Opportunities for Lgerin Egill and Hampidjan
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lgerin and Hampidjan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding lgerin Egill Skallagrmsson and Hampidjan hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampidjan hf and Lgerin Egill 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 lgerin Egill Skallagrmsson are associated (or correlated) with Hampidjan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampidjan hf has no effect on the direction of Lgerin Egill i.e., Lgerin Egill and Hampidjan go up and down completely randomly.
Pair Corralation between Lgerin Egill and Hampidjan
Assuming the 90 days trading horizon lgerin Egill Skallagrmsson is expected to generate 0.65 times more return on investment than Hampidjan. However, lgerin Egill Skallagrmsson is 1.54 times less risky than Hampidjan. It trades about 0.08 of its potential returns per unit of risk. Hampidjan hf is currently generating about -0.04 per unit of risk. If you would invest 1,730 in lgerin Egill Skallagrmsson on August 25, 2024 and sell it today you would earn a total of 30.00 from holding lgerin Egill Skallagrmsson or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
lgerin Egill Skallagrmsson vs. Hampidjan hf
Performance |
| Timeline |
| lgerin Egill Skallag |
| Hampidjan hf |
Lgerin Egill and Hampidjan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lgerin Egill and Hampidjan
The main advantage of trading using opposite Lgerin Egill and Hampidjan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lgerin Egill position performs unexpectedly, Hampidjan 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 Hampidjan will offset losses from the drop in Hampidjan's long position.| Lgerin Egill vs. Arion banki hf | Lgerin Egill vs. Iceland Seafood International | Lgerin Egill vs. Kvika banki hf |
| Hampidjan vs. Arion banki hf | Hampidjan vs. Flying Nickel Mining | Hampidjan vs. Marel hf | Hampidjan vs. Kvika banki hf |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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