Correlation Between AS Latvijas and AMBRA SA

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

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

Diversification Opportunities for AS Latvijas and AMBRA SA

-0.14

Correlation Coefficient

AS Latvijas  AMBRA SA

Good diversification

The 3 months correlation between UM9 and AMBRA is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding AS Latvijas balzams 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 AS Latvijas 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 AS Latvijas balzams 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 AS Latvijas i.e., AS Latvijas and AMBRA SA go up and down completely randomly.

Pair Corralation between AS Latvijas and AMBRA SA

Assuming the 90 days trading horizon AS Latvijas is expected to generate 2.09 times less return on investment than AMBRA SA. But when comparing it to its historical volatility, AS Latvijas balzams is 5.31 times less risky than AMBRA SA. It trades about 0.12 of its potential returns per unit of risk. AMBRA SA A is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  500.00  in AMBRA SA A on December 26, 2024 and sell it today you would earn a total of  36.00  from holding AMBRA SA A or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

AS Latvijas balzams  vs.  AMBRA SA A

AS Latvijas balzams

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AS Latvijas balzams are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AS Latvijas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

AMBRA SA A

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AMBRA SA A are ranked lower than 3 (%) 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 AS Latvijas and AMBRA SA

The main advantage of trading using opposite AS Latvijas and AMBRA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AS Latvijas 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 AS Latvijas balzams 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.