Correlation Between Microsoft and Ambu A/S
Can any of the company-specific risk be diversified away by investing in both Microsoft and Ambu A/S 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 Microsoft and Ambu A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Ambu AS, you can compare the effects of market volatilities on Microsoft and Ambu A/S 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 Microsoft with a short position of Ambu A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Ambu A/S.
Diversification Opportunities for Microsoft and Ambu A/S
Significant diversification
The 3 months correlation between Microsoft and Ambu is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Ambu AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambu A/S and Microsoft 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 Microsoft are associated (or correlated) with Ambu A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambu A/S has no effect on the direction of Microsoft i.e., Microsoft and Ambu A/S go up and down completely randomly.
Pair Corralation between Microsoft and Ambu A/S
Given the investment horizon of 90 days Microsoft is expected to generate 2.41 times less return on investment than Ambu A/S. In addition to that, Microsoft is 1.36 times more volatile than Ambu AS. It trades about 0.02 of its total potential returns per unit of risk. Ambu AS is currently generating about 0.07 per unit of volatility. If you would invest 1,850 in Ambu AS on August 29, 2024 and sell it today you would earn a total of 140.00 from holding Ambu AS or generate 7.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Microsoft vs. Ambu AS
Performance |
| Timeline |
| Microsoft |
| Ambu A/S |
Microsoft and Ambu A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Ambu A/S
The main advantage of trading using opposite Microsoft and Ambu A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Ambu A/S 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 Ambu A/S will offset losses from the drop in Ambu A/S's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Ambu A/S vs. Insulet | Ambu A/S vs. Globus Medical | Ambu A/S vs. Novocure | Ambu A/S vs. Bio Rad Laboratories |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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