Correlation Between Ringkjoebing Landbobank and Embla Medical
Can any of the company-specific risk be diversified away by investing in both Ringkjoebing Landbobank 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 Ringkjoebing Landbobank and Embla Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ringkjoebing Landbobank AS and Embla Medical hf, you can compare the effects of market volatilities on Ringkjoebing Landbobank 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 Ringkjoebing Landbobank with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ringkjoebing Landbobank and Embla Medical.
Diversification Opportunities for Ringkjoebing Landbobank and Embla Medical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ringkjoebing and Embla is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ringkjoebing Landbobank 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 Ringkjoebing Landbobank 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 Ringkjoebing Landbobank 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 Ringkjoebing Landbobank i.e., Ringkjoebing Landbobank and Embla Medical go up and down completely randomly.
Pair Corralation between Ringkjoebing Landbobank and Embla Medical
Assuming the 90 days trading horizon Ringkjoebing Landbobank AS is expected to generate 0.82 times more return on investment than Embla Medical. However, Ringkjoebing Landbobank AS is 1.22 times less risky than Embla Medical. It trades about 0.15 of its potential returns per unit of risk. Embla Medical hf is currently generating about 0.06 per unit of risk. If you would invest 114,100 in Ringkjoebing Landbobank AS on September 4, 2024 and sell it today you would earn a total of 3,900 from holding Ringkjoebing Landbobank AS or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ringkjoebing Landbobank AS vs. Embla Medical hf
Performance |
| Timeline |
| Ringkjoebing Landbobank |
| Embla Medical hf |
Ringkjoebing Landbobank and Embla Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ringkjoebing Landbobank and Embla Medical
The main advantage of trading using opposite Ringkjoebing Landbobank and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ringkjoebing Landbobank 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.| Ringkjoebing Landbobank vs. FLSmidth Co | Ringkjoebing Landbobank vs. Danske Bank AS | Ringkjoebing Landbobank vs. ISS AS | Ringkjoebing Landbobank vs. DSV Panalpina AS |
| Embla Medical vs. Laan Spar Bank | Embla Medical vs. Nordinvestments AS | Embla Medical vs. Lollands Bank | Embla Medical vs. Jyske Bank 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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