Correlation Between Arion Banki and Lammhults Design

Can any of the company-specific risk be diversified away by investing in both Arion Banki and Lammhults Design 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 Arion Banki and Lammhults Design into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arion banki hf and Lammhults Design Group, you can compare the effects of market volatilities on Arion Banki and Lammhults Design 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 Arion Banki with a short position of Lammhults Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Lammhults Design.

Diversification Opportunities for Arion Banki and Lammhults Design

-0.79

Correlation Coefficient

Arion Banki  Lammhults Design

Pay attention - limited upside

The 3 months correlation between Arion and Lammhults is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Lammhults Design Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lammhults Design and Arion Banki 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 Arion banki hf are associated (or correlated) with Lammhults Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lammhults Design has no effect on the direction of Arion Banki i.e., Arion Banki and Lammhults Design go up and down completely randomly.

Pair Corralation between Arion Banki and Lammhults Design

Assuming the 90 days trading horizon Arion banki hf is expected to generate 0.77 times more return on investment than Lammhults Design. However, Arion banki hf is 1.3 times less risky than Lammhults Design. It trades about 0.05 of its potential returns per unit of risk. Lammhults Design Group is currently generating about -0.2 per unit of risk. If you would invest  1,085  in Arion banki hf on February 4, 2024 and sell it today you would earn a total of  15.00  from holding Arion banki hf or generate 1.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Arion banki hf  vs.  Lammhults Design Group

Arion banki hf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arion banki hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lammhults Design

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lammhults Design Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lammhults Design is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arion Banki and Lammhults Design

The main advantage of trading using opposite Arion Banki and Lammhults Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arion Banki position performs unexpectedly, Lammhults Design 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 Lammhults Design will offset losses from the drop in Lammhults Design's long position.

The idea behind Arion banki hf and Lammhults Design Group 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.