Correlation Between LANSON BCC and AMBRA SA

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

By analyzing existing cross correlation between LANSON BCC INH EO and AMBRA SA A, you can compare the effects of market volatilities on LANSON BCC and AMBRA SA 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 LANSON BCC with a short position of AMBRA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANSON BCC and AMBRA SA.

Diversification Opportunities for LANSON BCC and AMBRA SA

-0.5

Correlation Coefficient

LANSON BCC  AMBRA SA

Very good diversification

The 3 months correlation between LANSON and AMBRA is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LANSON BCC INH EO and AMBRA SA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMBRA SA A and LANSON BCC 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 LANSON BCC INH EO are associated (or correlated) with AMBRA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMBRA SA A has no effect on the direction of LANSON BCC i.e., LANSON BCC and AMBRA SA go up and down completely randomly.

Pair Corralation between LANSON BCC and AMBRA SA

Assuming the 90 days horizon LANSON BCC INH EO is expected to generate 1.89 times more return on investment than AMBRA SA. However, LANSON BCC is 1.89 times more volatile than AMBRA SA A. It trades about 0.02 of its potential returns per unit of risk. AMBRA SA A is currently generating about 0.02 per unit of risk. If you would invest  3,500  in LANSON BCC INH EO on September 22, 2024 and sell it today you would earn a total of  10.00  from holding LANSON BCC INH EO or generate 0.29% return on investment over 90 days.

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

LANSON BCC INH EO  vs.  AMBRA SA A

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AMBRA SA A

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMBRA SA A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMBRA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LANSON BCC and AMBRA SA

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

The idea behind LANSON BCC INH EO and AMBRA SA A 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.