Correlation Between Ambu AS and Bang Olufsen

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

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

Diversification Opportunities for Ambu AS and Bang Olufsen

0.41

Correlation Coefficient

Ambu AS  Bang Olufsen

Very weak diversification

The 3 months correlation between Ambu and Bang is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ambu AS and Bang Olufsen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bang Olufsen 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 Bang Olufsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bang Olufsen has no effect on the direction of Ambu AS i.e., Ambu AS and Bang Olufsen go up and down completely randomly.

Pair Corralation between Ambu AS and Bang Olufsen

Assuming the 90 days trading horizon Ambu AS is expected to generate 2.08 times less return on investment than Bang Olufsen. In addition to that, Ambu AS is 1.01 times more volatile than Bang Olufsen. It trades about 0.11 of its total potential returns per unit of risk. Bang Olufsen is currently generating about 0.23 per unit of volatility. If you would invest  939.00  in Bang Olufsen on December 29, 2024 and sell it today you would earn a total of  441.00  from holding Bang Olufsen or generate 46.96% return on investment over 90 days.

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

Ambu AS  vs.  Bang Olufsen

Ambu AS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ambu AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Ambu AS sustained solid returns over the last few months and may actually be approaching a breakup point.

Bang Olufsen

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bang Olufsen are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Bang Olufsen displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambu AS and Bang Olufsen

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

The idea behind Ambu AS and Bang Olufsen 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.