Correlation Between Ambu AS and Eolus Vind

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

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

Diversification Opportunities for Ambu AS and Eolus Vind

0.75

Correlation Coefficient

Ambu AS  Eolus Vind

Poor diversification

The 3 months correlation between Ambu and Eolus is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ambu AS and Eolus Vind AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eolus Vind AB 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 Eolus Vind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eolus Vind AB has no effect on the direction of Ambu AS i.e., Ambu AS and Eolus Vind go up and down completely randomly.

Pair Corralation between Ambu AS and Eolus Vind

Assuming the 90 days trading horizon Ambu AS is expected to generate 1.33 times less return on investment than Eolus Vind. But when comparing it to its historical volatility, Ambu AS is 1.25 times less risky than Eolus Vind. It trades about 0.11 of its potential returns per unit of risk. Eolus Vind AB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,645  in Eolus Vind AB on December 2, 2024 and sell it today you would earn a total of  1,025  from holding Eolus Vind AB or generate 22.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Ambu AS  vs.  Eolus Vind AB

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.

Eolus Vind AB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eolus Vind AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Eolus Vind sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ambu AS and Eolus Vind

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

The idea behind Ambu AS and Eolus Vind 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .