Correlation Between Ambea AB and Swedish Orphan

Can any of the company-specific risk be diversified away by investing in both Ambea AB and Swedish Orphan 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 Ambea AB and Swedish Orphan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ambea AB and Swedish Orphan Biovitrum, you can compare the effects of market volatilities on Ambea AB and Swedish Orphan 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 Ambea AB with a short position of Swedish Orphan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambea AB and Swedish Orphan.

Diversification Opportunities for Ambea AB and Swedish Orphan

-0.31

Correlation Coefficient

Ambea AB  Swedish Orphan

Very good diversification

The 3 months correlation between Ambea and Swedish is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ambea AB and Swedish Orphan Biovitrum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swedish Orphan Biovitrum and Ambea AB 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 Ambea AB are associated (or correlated) with Swedish Orphan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swedish Orphan Biovitrum has no effect on the direction of Ambea AB i.e., Ambea AB and Swedish Orphan go up and down completely randomly.

Pair Corralation between Ambea AB and Swedish Orphan

Assuming the 90 days trading horizon Ambea AB is expected to generate 9.9 times less return on investment than Swedish Orphan. But when comparing it to its historical volatility, Ambea AB is 1.08 times less risky than Swedish Orphan. It trades about 0.02 of its potential returns per unit of risk. Swedish Orphan Biovitrum is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  26,360  in Swedish Orphan Biovitrum on February 5, 2024 and sell it today you would earn a total of  1,640  from holding Swedish Orphan Biovitrum or generate 6.22% return on investment over 90 days.

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

Ambea AB  vs.  Swedish Orphan Biovitrum

Ambea AB

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ambea AB are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ambea AB unveiled solid returns over the last few months and may actually be approaching a breakup point.

Swedish Orphan Biovitrum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Swedish Orphan Biovitrum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Swedish Orphan is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ambea AB and Swedish Orphan

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

The idea behind Ambea AB and Swedish Orphan Biovitrum 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.