Correlation Between Sminn Hf and Solid Clouds
Can any of the company-specific risk be diversified away by investing in both Sminn Hf and Solid Clouds 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 Sminn Hf and Solid Clouds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sminn hf and Solid Clouds hf, you can compare the effects of market volatilities on Sminn Hf and Solid Clouds 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 Sminn Hf with a short position of Solid Clouds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sminn Hf and Solid Clouds.
Diversification Opportunities for Sminn Hf and Solid Clouds
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sminn and Solid is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sminn hf and Solid Clouds hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solid Clouds hf and Sminn Hf 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 Sminn hf are associated (or correlated) with Solid Clouds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solid Clouds hf has no effect on the direction of Sminn Hf i.e., Sminn Hf and Solid Clouds go up and down completely randomly.
Pair Corralation between Sminn Hf and Solid Clouds
Assuming the 90 days trading horizon Sminn hf is expected to generate 0.11 times more return on investment than Solid Clouds. However, Sminn hf is 9.31 times less risky than Solid Clouds. It trades about 0.4 of its potential returns per unit of risk. Solid Clouds hf is currently generating about 0.02 per unit of risk. If you would invest 1,100 in Sminn hf on August 30, 2024 and sell it today you would earn a total of 160.00 from holding Sminn hf or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sminn hf vs. Solid Clouds hf
Performance |
| Timeline |
| Sminn hf |
| Solid Clouds hf |
Sminn Hf and Solid Clouds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sminn Hf and Solid Clouds
The main advantage of trading using opposite Sminn Hf and Solid Clouds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sminn Hf position performs unexpectedly, Solid Clouds 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 Solid Clouds will offset losses from the drop in Solid Clouds' long position.The idea behind Sminn hf and Solid Clouds hf pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Solid Clouds vs. Icelandair Group hf | Solid Clouds vs. Arion banki hf | Solid Clouds vs. Kvika banki hf | Solid Clouds 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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