Correlation Between Groenlandsbanken and Embla Medical

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

By analyzing existing cross correlation between Groenlandsbanken AS and Embla Medical hf, you can compare the effects of market volatilities on Groenlandsbanken 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 Groenlandsbanken with a short position of Embla Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Groenlandsbanken and Embla Medical.

Diversification Opportunities for Groenlandsbanken and Embla Medical

0.41

Correlation Coefficient

Groenlandsbanken  Embla Medical

Very weak diversification

The 3 months correlation between Groenlandsbanken and Embla is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Groenlandsbanken 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 Groenlandsbanken 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 Groenlandsbanken 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 Groenlandsbanken i.e., Groenlandsbanken and Embla Medical go up and down completely randomly.

Pair Corralation between Groenlandsbanken and Embla Medical

Assuming the 90 days trading horizon Groenlandsbanken is expected to generate 2.44 times less return on investment than Embla Medical. But when comparing it to its historical volatility, Groenlandsbanken AS is 2.9 times less risky than Embla Medical. It trades about 0.12 of its potential returns per unit of risk. Embla Medical hf is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,739  in Embla Medical hf on April 25, 2025 and sell it today you would earn a total of  501.00  from holding Embla Medical hf or generate 18.29% return on investment over 90 days.

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

Groenlandsbanken AS  vs.  Embla Medical hf

Groenlandsbanken

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Groenlandsbanken AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Groenlandsbanken may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Embla Medical hf

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embla Medical hf are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Embla Medical exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Groenlandsbanken and Embla Medical

The main advantage of trading using opposite Groenlandsbanken and Embla Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Groenlandsbanken 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.

The idea behind Groenlandsbanken AS and Embla Medical 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.