Correlation Between Carmit and Hampidjan

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

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

Diversification Opportunities for Carmit and Hampidjan

-0.21

Correlation Coefficient

Carmit  Hampidjan

Very good diversification

The 3 months correlation between Carmit and Hampidjan is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Carmit and Hampidjan hf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hampidjan hf and Carmit 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 Carmit are associated (or correlated) with Hampidjan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hampidjan hf has no effect on the direction of Carmit i.e., Carmit and Hampidjan go up and down completely randomly.

Pair Corralation between Carmit and Hampidjan

Assuming the 90 days trading horizon Carmit is expected to generate 1.45 times more return on investment than Hampidjan. However, Carmit is 1.45 times more volatile than Hampidjan hf. It trades about 0.05 of its potential returns per unit of risk. Hampidjan hf is currently generating about -0.09 per unit of risk. If you would invest  115,300  in Carmit on August 30, 2024 and sell it today you would earn a total of  4,000  from holding Carmit or generate 3.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.77%
Values	Daily Returns

Carmit  vs.  Hampidjan hf

Carmit

Risk-Adjusted Performance

3 of 100

Insignificant

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

Hampidjan hf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hampidjan hf has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Carmit and Hampidjan

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

The idea behind Carmit and Hampidjan 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..