Correlation Between Ambu AS and H Lundbeck
Can any of the company-specific risk be diversified away by investing in both Ambu AS and H Lundbeck 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 H Lundbeck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambu AS and H Lundbeck AS, you can compare the effects of market volatilities on Ambu AS and H Lundbeck 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 H Lundbeck. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambu AS and H Lundbeck.
Diversification Opportunities for Ambu AS and H Lundbeck
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ambu and HLUN-A is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ambu AS and H Lundbeck AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H Lundbeck 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 H Lundbeck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H Lundbeck AS has no effect on the direction of Ambu AS i.e., Ambu AS and H Lundbeck go up and down completely randomly.
Pair Corralation between Ambu AS and H Lundbeck
Assuming the 90 days trading horizon Ambu AS is expected to generate 1.69 times less return on investment than H Lundbeck. In addition to that, Ambu AS is 1.54 times more volatile than H Lundbeck AS. It trades about 0.02 of its total potential returns per unit of risk. H Lundbeck AS is currently generating about 0.06 per unit of volatility. If you would invest 2,360 in H Lundbeck AS on August 29, 2024 and sell it today you would earn a total of 1,195 from holding H Lundbeck AS or generate 50.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ambu AS vs. H Lundbeck AS
Performance |
| Timeline |
| Ambu AS |
| H Lundbeck AS |
Ambu AS and H Lundbeck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ambu AS and H Lundbeck
The main advantage of trading using opposite Ambu AS and H Lundbeck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambu AS position performs unexpectedly, H Lundbeck 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 H Lundbeck will offset losses from the drop in H Lundbeck's long position.The idea behind Ambu AS and H Lundbeck 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.| H Lundbeck vs. GN Store Nord | H Lundbeck vs. FLSmidth Co | H Lundbeck vs. ALK Abell AS | H Lundbeck vs. Ambu AS |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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