Correlation Between Ambea AB and Karnov Group

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

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

Diversification Opportunities for Ambea AB and Karnov Group

0.22

Correlation Coefficient

Ambea AB  Karnov Group

Modest diversification

The 3 months correlation between Ambea and Karnov is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ambea AB and Karnov Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Karnov Group AB and Ambea AB 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 Ambea AB are associated (or correlated) with Karnov Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Karnov Group AB has no effect on the direction of Ambea AB i.e., Ambea AB and Karnov Group go up and down completely randomly.

Pair Corralation between Ambea AB and Karnov Group

Assuming the 90 days trading horizon Ambea AB is expected to generate 1.35 times more return on investment than Karnov Group. However, Ambea AB is 1.35 times more volatile than Karnov Group AB. It trades about 0.17 of its potential returns per unit of risk. Karnov Group AB is currently generating about 0.17 per unit of risk. If you would invest  9,000  in Ambea AB on September 5, 2024 and sell it today you would earn a total of  685.00  from holding Ambea AB or generate 7.61% return on investment over 90 days.

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

Ambea AB  vs.  Karnov Group AB

Ambea AB

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambea AB are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambea AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Karnov Group AB

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Karnov Group AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Karnov Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ambea AB and Karnov Group

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

The idea behind Ambea AB and Karnov Group 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.