Correlation Between Ambu AS and ALK Abell

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

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

Diversification Opportunities for Ambu AS and ALK Abell

0.76

Correlation Coefficient

Ambu AS  ALK Abell

Poor diversification

The 3 months correlation between Ambu and ALK is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Ambu AS and ALK Abell AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALK Abell AS and Ambu AS 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 Ambu AS are associated (or correlated) with ALK Abell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALK Abell AS has no effect on the direction of Ambu AS i.e., Ambu AS and ALK Abell go up and down completely randomly.

Pair Corralation between Ambu AS and ALK Abell

Assuming the 90 days trading horizon Ambu AS is expected to under-perform the ALK Abell. In addition to that, Ambu AS is 1.03 times more volatile than ALK Abell AS. It trades about -0.09 of its total potential returns per unit of risk. ALK Abell AS is currently generating about -0.08 per unit of volatility. If you would invest  18,000  in ALK Abell AS on August 31, 2024 and sell it today you would lose (2,130) from holding ALK Abell AS or give up 11.83% of portfolio value over 90 days.

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

Ambu AS  vs.  ALK Abell AS

Ambu AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambu AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ALK Abell AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALK Abell AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Ambu AS and ALK Abell

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

The idea behind Ambu AS and ALK Abell AS 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.