Correlation Between Arion Banki and Awardit AB

Can any of the company-specific risk be diversified away by investing in both Arion Banki and Awardit AB 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 Awardit AB 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 Awardit AB, you can compare the effects of market volatilities on Arion Banki and Awardit AB 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 Awardit AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arion Banki and Awardit AB.

Diversification Opportunities for Arion Banki and Awardit AB

0.28

Correlation Coefficient

Arion Banki  Awardit AB

Modest diversification

The 3 months correlation between Arion and Awardit is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Arion banki hf and Awardit AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awardit AB 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 Awardit AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awardit AB has no effect on the direction of Arion Banki i.e., Arion Banki and Awardit AB go up and down completely randomly.

Pair Corralation between Arion Banki and Awardit AB

Assuming the 90 days trading horizon Arion banki hf is expected to generate 1.08 times more return on investment than Awardit AB. However, Arion Banki is 1.08 times more volatile than Awardit AB. It trades about 0.19 of its potential returns per unit of risk. Awardit AB is currently generating about 0.02 per unit of risk. If you would invest  1,025  in Arion banki hf on September 13, 2024 and sell it today you would earn a total of  220.00  from holding Arion banki hf or generate 21.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	87.5%
Values	Daily Returns

Arion banki hf  vs.  Awardit AB

Arion banki hf

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Arion banki hf are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Arion Banki unveiled solid returns over the last few months and may actually be approaching a breakup point.

Awardit AB

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awardit AB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Awardit AB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Arion Banki and Awardit AB

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

The idea behind Arion banki hf and Awardit AB 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.

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.